WASHINGTON -- Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-NY) have introduced legislation that would repeal the Durbin Amendment, which caps the amount banks can charge retailers when a debit card is used. The Congressmen argue that the new rules, which went into effect on Oct. 1, hurt both consumers and banks.
The Durbin Amendment, which was part of last year's Wall Street reform law, capped debit card swipe fees charged by banks at 21¢ per transaction, down from an average 44¢. Chaffetz and Owens argue that the banks, which will lose billions of dollars in fees, are now forced to recoup lost revenue by passing costs down to consumers.
"This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market," said Chaffetz. "The Durbin Amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher -- and in some cases new -- fees to make up for lost revenue."
Bank of America took the lead, announcing on Sept. 29 that it will begin charging a monthly fee at the beginning of next year to customers who make debit card purchases. Whether they make one purchase with their cards or 20, BofA debit card users will pay $5 a month. They will not be assessed a fee if they don't use their cards for debit purchases.
The Durbin Amendment has could also deal a damaging blow to the growing number of vending operators who provide cashless payments. Visa and Mastercard, the largest consumer payment networks, said they plan to raise debit card fees charged for small-ticket purchases to the full amount allowed under new rules. This could as much as triple the cost of an average vending transaction.
The National Automatic Merchandising Association and the industry's cashless payment providers are advocating on the industry's behalf before the credit card associations, legislators and financial institutions in an effort to ease the burden of the new fee structure on vending operators. | SEE STORY