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A study by the Federal Reserve Bank of Richmond found that the Durbin Amendment is not working as Congress intended and has led to several unintended consequences. This resource provides further information on how the Amendment has failed consumers.
A statement from Molly Wilkinson, executive director of the Electronic Payments Coalition (EPC) praising testimony from Professor Todd Zywicki at the U.S. Senate Committee on Banking, Housing, & Urban Affairs hearing today: Price controls on debit card transactions, which were enacted through the Durbin Amendment, have created a hand out for retailers that so far has reached $36 billion and continues to rise each year. Professor Zywicki’s testimony made this padding by large retailers evident by noting, “While the Durbin Amendment has saved big box retailers billions of dollars per year in interchange fees, there is no evidence to date that those cost savings have been passed on to retail consumers. In short, consumers are paying higher fees for bank accounts and receiving no rebates from retailers. Indeed, unlike big box retailers that have received multi-billion dollar windfalls, many small retailers are actually paying higher merchant discount rates than … Continue reading
Electronic Payments Coalition Executive Director Molly Wilkinson wrote to Fed Chair Janet Yellen to express concerns regarding the detrimental effect the Durbin Amendment is having on consumers.
Philadelphia Fed Analysis of the Effect of Interchange Fee Restrictions on Small Banks Is Incomplete
The Federal Reserve Bank of Philadelphia published a brief yet incomplete note on the impact of Dodd-Frank on small banks. This resource clarifies positions stated in their analysis and provides further information.
Four Years Later, Consumers Aren’t Seeing Savings Promised by Retailers From the Durbin Amendment WASHINGTON, DC – October 1, 2015 marks the fourth anniversary of the Durbin amendment’s implementation, but consumers aren’t celebrating. Once again, a new survey shows at least 92 percent of shoppers in each of the 15 categories measured reported that prices have increased or remained the same over the past year. This survey provides additional evidence that despite retailer promises that they would lower prices after realizing savings from the amendment – savings that now total over $32 billion – consumers generally have not seen savings. This survey, conducted in September 2015 by Phoenix Marketing International and sponsored by the Electronic Payments Coalition, asked nearly 2,000 consumers about price changes they have observed at a variety of retailers. The survey found continued evidence that most shoppers are not experiencing a price decrease at the point-of-sale. Supermarket shoppers … Continue reading
On the Third Anniversary of the Durbin Amendment, 94% of Consumers Not Seeing the Savings Retailers Promised Them
WASHINGTON, DC – October 1, 2014, marks the third anniversary of the implementation of the Durbin amendment, a piece of legislation that was masked as reform, but was nothing more than an $8 billion annual windfall for retailers. While retailers promised they would pass along savings to consumers – savings that now amount to over $24 billion for retailers – a new survey shows that 94% of consumers have seen prices that have increased or remained the same over the past three years. This survey, conducted in September 2014 by Phoenix Marketing International and sponsored by the Electronic Payments Coalition, asked 3,400 consumers about price changes they have observed at a variety of retailers. The research shows that 94% of consumers have seen prices increase or remain the same in the 16 individual point-of-sale categories measured in the survey, and a majority of consumers have seen prices increase at pharmacies, … Continue reading
Despite $1 Billion Annual Subsidy for Gas Retailers, Consumers Seeing No Relief at the Pump This Summer
Despite $1 Billion Annual Subsidy for Gas Retailers, Consumers Seeing No Relief at the Pump This Summer Payment Networks Voluntarily Capped Charges, But Retailers Pocketed Windfall Profits Washington, DC – July 31, 2014 – This summer, Americans are facing average retail gasoline prices of around $3.61 per gallon. Unfortunately, despite the strain that these high prices place on consumers, there is still no evidence that gas retailers are passing on any of the roughly $1 billion annual subsidy they receive from the Durbin amendment on to consumers in the form of lower prices. “Retailers convinced Congress to lower debit interchange fees by promising they would pass the savings onto consumers yet there’s no evidence consumers are seeing lower prices,” said Jeff Tassey, Executive Director of the Electronic Payments Coalition. “Likewise, Payment Networks voluntarily capped the fees that they charge gas retailers on fuel transactions in the hope that doing so would … Continue reading
University of Chicago Law School Analysis Finds Consumers Will Lose $22 Billion as a Result of the Durbin amendment Nearly three years after the implementation of the Durbin amendment, consumers have yet to see the savings that retailers promised. Instead, they are paying the same or higher prices for goods and services and more in consumer banking costs. An analysis by University of Chicago Law School economists David S. Evans, Howard Chang, and Steven Joyce entitled “The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare: An Event Study Analysis” quantifies just how much consumers are expected to lose, rather than gain, from The Durbin amendment. The paper analyzes stock prices to determine the impact to consumers from the Durbin Amendment. The analysis finds that retailers gained a $7 billion yearly windfall starting in 2011 as a result of the Durbin amendment. At the same time, consumers … Continue reading
The Federal Reserve Bank of Richmond published the report “Debit Card Interchange Fee Regulation: Some Assessments and Considerations” in the third quarter 2012 issue of Economic Quarterly. The report analyzes the debit card interchange fee regulation introduced by the Durbin amendment and its first-year impact on different players in the debit card market. The report specifically notes the unintended consequences of the Durbin amendment on small-ticket sales and rising bank fees.
The survey found that 72 percent of credit union checking accounts remain free and 39 percent of bank checking accounts remain free. The article notes that one reason for the difference may be that most credit unions aren’t subject to the Durbin amendment, which has resulted in a loss of revenue for many institutions. The author explains that checking account fees have been used as a way to make up for those revenue losses.