After years of work, rules took effect in October 2011 to limit debit swipes to a flat fee of 22 cents per transaction plus 0.05 percent of the purchase, or just under a quarter in most cases. Prior to passage of the Durbin Amendment to the Dodd-Frank Act (DFA), banks charged retailers 1 percent to 2 percent of the purchase amount to process debit card transactions. That amounted to about 45 cents on the typical debit purchases but could come to several dollars on larger purchases.
FLAT FEE JUST FOR BIGGEST BANKS; BENEFITS ALL RETAILERS
The flat fee only applies to the nation’s largest two percent of banks, or those with more than $10 billion in assets. ONE HUNDRED PERCENT of retailers, as well as their employees and customers, benefit from lower swipe fees.
REPEAL WOULD RESULT IN HIGHER SWIPE FEES
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, recently released details of his plan to replace the DFA, specifically highlighting his intention to fully repeal the debit swipe fee reforms known as the Durbin Amendment. Hensarling’s proposal follows standalone legislation by Rep. Randy Neugebauer, also R-Texas, to repeal Durbin.
Should Durbin be repealed, banks and card networks will again impose outrageous fees on merchants across the country. In addition to repealing the cap, the proposal would repeal a Durbin provision that lets retailers route debit transactions over payment networks that compete with those owned by the major card companies.
Retailers have passed along the overwhelming majority of the $8.5 billion in annual savings from Durbin to consumers, according to a study conducted by noted economist Robert Shapiro. At 22 cents, however, the cap is more than five times banks’ actual cost of processing debit transactions. The Federal Reserve has estimated banks’ actual cost of processing debit transactions at an average of only 4 cents.
TAKE ACTION NOW!
Contact your Congressman TODAY and urge them to fight efforts to repeal the Durbin Amendment.
Chairman Hensarling is making a serious push to get this out of his committee and before the House,
AND RETAILERS MUST PUSH BACK!