Merchants Still Not Saving after Durbin Amendment
Nearly four years after the Durbin Amendment to the Dodd-Frank Act went into effect, the Federal Reserve Bank of Richmond has released a study assessing the impact the changes have had on merchants. Though the amendment was designed to save merchants money on debit card fees, less than 10% of participants reported a decrease in expenses on debit card transactions.
According to the study, 67% of merchants did not see a change in their debit card fees after the new regulation. In fact, one in four merchants said they saw an increase in their fees, and only 8% reported a decrease in expenses after the Durbin Amendment.
The regulation was not just designed to help merchants. It was also meant to save consumers money because, theoretically, merchants would not have to charge as much to cover the interchange or swipe fees. Nevertheless, 23% of merchants reported price increases after the amendment, and 75% reported no price changes at all. Only 2% said they had offered price cuts since that time.
A survey in October of 2014 by the Electronics Payment Coalition also found that consumers had seen very few price decreases as the result of the Durbin Amendment.
The industries that faired the best after the amendment were home furnishings, sporting goods and maintenance, all of which reported a reduction in the cost of debit card transactions. Those who faired the worst were delivery services, fast food chains and office products.
Will this new information yield yet another change in debit card fees? Probably not. With the shift to mobile payments and chip-embedded cards over the next few months, there will be significant adjustments in all areas of the payments sector, not just debit cards. Any amendments to the already existing regulations will likely be delayed until the effects of these new payment options can be analyzed.