Due to the Durbin Amendment’s phased implementation, it’s impossible for this initial report to fully reflect or predict the consequences of upending the marketplace with government price controls. It’s just too soon to tell. While it’s too early to see the Durbin Amendment’s full effect on community banks, its impact on consumers and small businesses has never been more apparent.
While retailers pocket $7 billion annually from lower interchange costs, their customers pay higher fees as institutions adjust to government-imposed losses in revenue. At the same time, many small businesses now face higher interchange rates for low-dollar transactions, a classic example of strange things that occur when government creates unnatural pressures to make up for lost revenue. The Durbin Amendment’s primary beneficiaries continue to be big-box retailers who want to reap the benefits of our nation's payments system without paying for it or passing along their savings to customers as promised.
ABA firmly believes the Durbin Amendment’s small-bank exemption can’t work long-term. No legislation can exempt community banks from market forces, and having two prices for the exact same product is simply not sustainable in a competitive system.
Wednesday, May 2, 2012
ABA: Too Soon to Determine Durbin Amendment’s Consequences
ABA president and CEO Frank Keating released a statement in response to the Federal Reserve’s comparative information on the average debit card interchange fee by payment card network research released yesterday.