Looks like for all the controversy surrounding the Durbin Amendment, the total cost to merchants for processing debit card transactions has barely budged, and in some cases, actually risen. From Robin Sidel at The Wall Street Journal:
In some cases, companies that process transactions on behalf of merchants are raising select fees while refusing to pass on to merchants the lower rates now charged by banks, according to letters sent to business owners.
Separately, some merchants that process a large number of debit transactions for small purchases — for example, under $15 in some cases — are seeing those rates rise because Visa Inc. and MasterCard Inc. have eliminated discounts that they had previously offered.
“What’s now becoming clear is that the winners are few and far between, as gains for some of even the very largest retailers seem illusive,” says Tony Hayes, who specializes in the payments industry at consulting firm Oliver Wyman.
You’ll recall the Durbin amendment set limits on the amount of money banks can charge merchants for processing debit-card transactions. The limits, set by the Fed, cut bank revenue on each transaction from an average of 44 cents per transaction to about 24 cents.
While it’s still early, and the anecdotes cited in the WSJ story aren’t a substitute for a detailed analysis of industry-wide debit card-processing fees, if debit card processing costs end up staying the same or even rising in the wake of Durbin, it’s going to mean a doubly raw deal for debit card users.
Not only have debit users largely had their debit card rewards programs gutted, but banks everywhere have been raising checking fees to try and compensate for the loss of swipe-fee revenue. Should merchants fail to see their debit-card costs fall, consumers will have paid these costs with no hope of realizing any of the retail price benefits promised by Durbin amendment supporters like the National Retail Federation.
What do you think? Will the Durbin Amendment ever work as intended to lower retail prices?