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On April 28, ABA, CBA, CUNA, EPC, FSR, ICBA, and NAFCU sent a letter to HFSC Chairman Hensarling and Ranking Member Waters urging repeal of the Durbin Amendment as part of CHOICE Act.
The Electronic Payments Coalition submitted comments to Chairman Hensarling ahead of the planned markup of the Financial CHOICE Act, which includes a provision to repeal the Durbin Amendment.
The Electronic Payments Coalition submitted comments to the House Financial Services Committee on the Financial CHOICE Act, supporting the inclusion of the Durbin Amendment’s repeal.
We have often warned about the negative effects of interchange fee regulation and specifically a cap on interchange fees. Last year we warned the European Parliament that a proposed EU-wide cap on interchange fees would cause many banks to raise fees and interest rates on all their customers, not just those who use debit or credit cards. We said: Capping interchange fees has been tried in some countries around the world. Despite claims that these efforts were for the benefit of consumers, the real world results have shown the opposite to be true. In every instance, consumers faced higher fees for banking services, a reduction in benefits and services and saw no return in the form of lower prices from merchants despite promises by merchants and policy makers to pass savings to consumers. We also noted in April that banks were already cutting back on card reward schemes. The negative … 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.
Government Barriers to Georgia’s Growth: How Dodd-Frank Price Controls Poach the Peach State’s Prosperity
This study from the Georgia Public Policy Foundation examines the effects of the Dodd-Frank Act on the Georgia economy. Georgia has been disproportionately affected by the financial crisis and this study finds that legislation, including the Durbin amendment, is making it increasingly harder for the economy to rebound.
This report from Moody’s examines the effects of the Durbin amendment on banks and payment processors. The report speculates that Durbin amendment’s reform of debit interchange and routing practices hits banks the hardest and makes payment processing more competitive. Merchant acquirers and retailers are benefiting from the rule changes and there is substantial evidence that they will not pass savings along to consumers. Despite the blow to banks, Moody’s expect them to attempt to offset the lost revenue by raising fees for other products and cutting expenses, though this process will be difficult and the timing is unclear.