Trade Groups Blast Lack of Consumer Gains under Durbin Amendment
Consumers have not gained as much as they should have under debit interchange limits imposed to implement the Durbin Amendment, two trade groups—that don’t agree on much related to interchange—have concluded.
The National Retail Federation, in a letter released late last week, said the cap on debit card interchange fees installed five years ago “has helped reduce costs for retailers and consumers but is still higher than intended by Congress and should be lowered.”
“In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing,” said Mallory Duncan, the retailer trade group’s senior vice president and general counsel. “However, it is still substantially higher than issuers’ incremental costs.”
The group estimates that retailers have “passed along two-thirds of the $8.5 billion in annual savings to consumers but there would have been more savings to share if the Fed had set the cap at the level expected by lawmakers.” The group notes that the Federal Reserve in its proposed rule calculated a cap of no more than 12 cents per transaction.
Another trade group, The Electronic Payments Coalition, recently released its own letter charging that retailers have pocketed some $36 billion in profit, rather than reducing prices for consumers as promised. In a letter to Fed Chair Janet Yellen, the trade group, which represents credit unions, community banks, payment card networks and other organizations, contends that retailers have not passed along the lower cost of debit transactions to consumers and the failure to do so has disproportionately hurt low-income consumers. “Regulators and policy makers should consider the economic consequences for the most vulnerable when promulgating new regulations and recognize that the Durbin Amendment, rather than helping with this worthwhile goal, merely aided retailers,” wrote Molly Wilkinson, the trade group’s executive director.