Friday, January 23, 2015
Posted by: Mike Rose
The Supreme Court on Jan. 20 declined to review the Durbin Amendment despite an appeal from retailers, according to Payment Week.
The Durbin Amendment, part of the Dodd-Frank Act of 2010, set caps on swipe and/or interchange fees for debit card transactions. The Federal Reserve announced final rates in 2011 reducing the cap on swipe/interchange fees from the average of around 40 cents to 21 cents per transaction.
Even though the Fed reduced the fees close to 50 percent, the original draft of the amendment called for the caps to be between 7 and 12 cents. This has caused disputes between retailers and banks, mainly because banks argued for the 21 cent cap in order to expand consumer benefit programs. Retailers have since petitioned against the amendment as they did not see any expansion of these benefits; coincidentally they have seen them reduced or eliminated.
The few cents that create major friction between banks and retailers amount to billions of dollars in annual revenue.