In Effect Seven Years, Durbin’s Interchange Caps Still Roil the Waters of the Payments World

The debit interchange controls of the Durbin Amendment went into effect seven years ago Monday, and to mark the occasion the Electronic Payments Coalition issued its latest salvo in what appears to be a never-ending feud over that law.

According to survey results released by the EPC, 52% of registered voters say they have seen no discounts from merchants arising from Durbin since the law’s interchange caps took effect. Moreover, 29% of these voters say “processing companies” should determine interchange rates, not the government. Some 24% say likewise for retailers.

The results also show “more than one-third” of voters surveyed this year and last agreed the law ought to be repealed if merchants aren’t returning some of their savings to customers. Republican lawmakers mounted a repeal effort in 2017 that ultimately fizzled. The amendment is named for its chief sponsor, Sen. Richard Durbin, D-Ill.

“Year after year, retailers continue to harm consumers by failing to pass along promised savings—to the tune of six to eight billion dollars each year—while obstructing data security legislation establishing standards for all parts of the industry,” said Jeff Tassey, chairman of the Washington, D.C.-based EPC, a lobbying organization for major banks and the big card networks, in a statement about the survey. “As we hit another unfortunate milestone with the Durbin Amendment, it’s time retailers put their customers over profits in all areas of payments.”

The amendment, which curbs interchange on debit card transactions for financial institutions with at least $10 billion in assets, was bitterly contested even before its passage as part of the Dodd-Frank Act. The caps on interchange—or “swipe fees,” as the levy came to be known during debate on the bill—took effect on Oct. 1, 2011 (a separate part of the law, which required all debit card issuers to allow merchants to choose how to route transactions, became effective six months later).

Arguing acceptance costs were too high, merchants pushed for the law and indicated it would allow them to pass on at least some of the savings to consumers. Most big banks and the card networks, both individually and through the EPC, strongly oppose Durbin as an unwarranted interference in what they view as market pricing.

Conducted last month, the EPC survey canvassed a national sample of 1,979 registered voters online. The results have a margin of error of plus or minus two percentage points, according to the EPC.

Unsurprisingly, merchant groups take issue with the EPC’s survey. In particular, they point to the “more than one-third” of respondents who favor repeal as an unimpressive number.

“If nothing else, the credit card companies are showing a remarkable ability to waste the huge fees they swipe from consumers and merchants,” says Lyle Beckwith, senior vice president for government relations at the National Association of Convenience Stores, Alexandria Va., in an email message. “Trumpeting their own biased poll that still shows nearly two-thirds of voters wouldn’t say swipe fee reform should be repealed just one year after a large bipartisan majority in the House of Representatives rejected their last repeal attempt may be the most useless, ineffectual exercise we will see in Washington this year.”