Debit Card Swipe Fee Reform a Step in the Right Direction

June 17, 2016

Earlier this week, Congressman Neugebauer (TX-19) introduced H.R. 5465, a bill to repeal swipe fee reforms, also known as the Durbin Amendment provision, which passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act back in 2010.

Repealing the Durbin Amendment, which placed a cap on debit card swipe fees and introduced competition into the debit routing system, would only serve to increase profits for big banks while hurting businesses and consumers. Lower debit swipe fees have allowed supermarkets to pass along savings to consumers in the form of extended sales and have allowed grocery stores to maintain consistent prices even during shortages that would otherwise result in price spikes.

Consumers have also seen benefits in ways that directly contradict the predictions of the banks. Despite banks insisting that the Durbin Amendment would be the end of free checking for consumers, free checking has increased from 53% to 61% since Durbin was implemented, according to the American Banking Association’s own numbers.

Economist Robert Shapiro has noted that consumers saved more than $6 billion in the first year after the Durbin Amendment went into effect. H.R. 5465 would send those savings directly back to the 1.4% of all banks that are held under the Durbin Amendment (only banks with more than $10 billion in assets are covered under the Durbin Amendment).

The Durbin Amendment has worked for consumers and businesses for the last 6 years and began to introduce competition into a system dominated by two major companies. We need to ensure more competition within the debit market – not remove it. The Durbin Amendment was a step in the right direction, now is not the time to take two steps back.