The upside of the Durbin Amendment is getting harder and harder to tease out as October 1st (the final implementation date for debit card interchange fee regulation) approaches. While there doesn’t appear to be any clear winner, the point has been made that a previously private financial services industry can be regulated. What’s been lost in the legislation is the benefit statement to any of its market stakeholders, as initial reactions from the impacted parties keep digging a deeper hole for the market to climb out of. Let’s hope it has finally hit bottom.
“Even supporters say it’s tough to chart the direct path for savings.
“You won’t be able to necessarily measure the savings, but I don’t see how they’re not passed on,” said Ed Mierzwinkski, director of the consumer program at the U.S. Public Interest Research Group.
Duncan said consumers would have benefited more but “the Fed semi-gutted some of the changes that Congress had passed.”
In fact, the new system could be self-defeating for restaurants and other outlets that depend on small transactions. Banks traditionally charged debit fees of two cents plus 1.5 percent of the purchase price.
The new caps have a flat fee, one that Visa and MasterCard, which maintain the debit card swipe networks, could choose to charge in full. Under the previous system, the fee on an $8 sandwich would be 14 cents. Now, it could be as much as 22 cents.”