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Durbin study doesn’t add up

By Marcie Geffner · Bankrate.com
Thursday, December 22, 2011
Posted: 10 am ET

A new research paper, "Where's the Debit Discount?" has concluded debit card swipe fee caps mandated by the Durbin Amendment haven't resulted in price savings for consumers.

The 17-page paper was published by the Electronic Payments Coalition, or EPC, a group of banking industry associations, banks, credit cards and debit payment-processing companies. The paper states consumers aren't benefitting from the Durbin amendment, even though retailers are experiencing significant savings.

That conclusion might be valid, but it is difficult to discern how it's supported by the EPC research, which was based on purchases of baskets of goods at retailers prior to and after the Oct. 1 effective date of the debit-card swipe fee caps.

According to the study, the purchases were made during 84 shopping trips to 21 retail locations of four major national retail brands in six U.S. cities. The retailers were Wal-Mart, Home Depot, Walgreens and 7-11. The cities were Atlanta, Boston, Little Rock, Ark., Portland, Maine, San Francisco and Washington, D.C. The purchased items included peanut butter, light bulbs, sugar, eggs, bread, beer, diapers, batteries, duct tape, paint, milk, Coke and Cheerios.

The study found that prices were higher or unchanged at 16 of the locations and lower at five of the locations.

While the issue is important and the methodology intriguing, the number of data points is hardly adequate to say anything about the effect of the Durbin Amendment on consumer prices throughout the United States.

Follow me on Twitter: @marciegeff.

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