Durbin Amendment Hurts Consumers, Community Banks, and Credit Unions

Despite retailers’ $8 billion windfall nearly a year after the Durbin amendment’s implementation, consumers still aren’t getting the lower prices they were promised, bank and credit union trade groups said in a September 21 letter to congressional leaders.

The trade groups also cited a recent Government Accountability Office (GAO) report that shows the many hardships that community banks and credit unions have endured since the amendment went into effect.

“[F]or smaller community banks and credit unions, which were supposed to be ‘exempted’ from the fallout of this legislation, interchange revenue dropped by 5 percent in just the first three months of implementation, and that was before the network exclusivity and routing provisions took effect in April 2012,” they said.

The study also notes that community banks and credit unions are struggling to maintain viable debit programs and some have had to raise fees. “The GAO … concludes that even more harm to community banks and credit unions is likely as the marketplace evolves,” the trade groups said.

They emphasized that any further regulation involving interchange fees is not only unnecessary, but an insult to consumers who have yet to see discounts for using their debit cards. “It’s clear that some retail groups will never be satisfied with any amount of windfall they receive,” the trade groups said. “It’s time to put this epic battle to a close before even more damage is done.”

Read the letter.