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The Atlanta retailer, one of the banking industry's fiercest opponents in the battles over interchange regulations, says its customers have benefited from lower prices after regulators capped debit card swipe fees.
June 12 -
A year after the Fed enacted the Durbin amendment, predictions that swipe fee reform would kill free checking, hurt credit unions and stifle competition have failed to come true.
July 31 -
This is a work of fiction. Any resemblance to real merchants, bankers, lobbyists, or politicians, living or dead, is purely coincidental.
August 2
Last week, federal judge Richard Leon handed merchants and consumers a win in the courtroom when he
The banks' PR machines were at work immediately claiming that this ruling will cripple the banking industry. Frank Keating, president of the American Bankers Association,
Other bankers have stated that bank fees will increase for consumer checking accounts as a result of a lower cap. But these are the same lines large banks have been using for years to combat banking regulation.
Even casual observers will recall Bank of America's threat to charge $5 per month for debit card transactions to make up for supposed lost swipe fee revenue back in 2011. This fee never came to fruition due to the rash of criticism and consumer complaints.
As the Fed considers appealing the recent court decision or revising its rules, there are a few important items to keep in mind that somehow seem to get lost in the rhetoric of swipe fee proponents.
First, despite the fact that debit card swipe fees had increased
Second, banks are not starving post-Durbin, and they will not starve as a result of this ruling. Swipe fee proponents claim the community banks would suffer as a result of Durbin. This has not happened. According to the Federal Reserve Bank of Kansas City, the Durbin amendment has had little
Additionally, the Government Accountability Office found that swipe fee income actually increased on a quarterly basis at 6,450 exempt banks after the Fed's final rule became effective. It is important to remember that the Durbin amendment only applies to financial institutions with over $10 billion in assets. Most of the financial institutions in the U.S. are not affected by Durbin.
The banks that are affected by Durbin aren't struggling to turn a profit. For example, Wells Fargo recently reported
Third, the experiences of other debit-reform countries suggest U.S. consumers may ultimately benefit from the reform. According to the Australian payments experts Transactions Resources, since the debit swipe fee reforms were introduced in Australia in 2006, debit card transactions
Fourth, consumers continue to win in the post-Durbin amendment world. As I
Now, with the Fed likely faced with reducing the debit card swipe fee cap, consumers will benefit even more. One unintended consequence of the Fed's final rule was the increase in swipe fees to merchants on small-ticket items. With "reasonable and proportional" swipe fees in place, merchants will be able to pass the savings of all goods on to consumers.
David Balto is an antitrust attorney and former policy director at the Federal Trade Commission.