Skip to comments.Remember the “Durbin Fee” while using your debit cards
Posted on 10/03/2011 8:31:10 AM PDT by Hojczyk
Government imposes new price controls on an industry. Industry raises prices elsewhere to make up for the artificial cap on cost recovery. Government expresses shock, shock at the development. For those of us old enough to remember the 1970s, this seems like deja vu all over again, as Yogi Berra once said. For those either too young or too dim, as the Washington Examiner puts it, the surprise should be a learning experience, even for a dim bulb like Dick Durbin
During the debate over the Dodd-Frank financial reform bill, when Democrats controlled Congress, Durbin insisted on including an amendment that had nothing to do with Dodd-Franks stated aims of stable banks and consumer protections. The Durbin amendment granted regulators the authority to establish price controls on what banks could charge merchants that accepted their customers debit cards as payment. The resulting regulations, which took effect Oct. 1, limit what banks can charge merchants to no more than 24 cents per debit card transaction.
Critics pointed out that banks, facing $6 billion annual losses from this change, would shift the costs of debit cards from merchants to bank customers. Sure enough, Bank of America and several of its largest competitors including Wells Fargo, PNC, HSBC, SunTrust, TDBank, and Chase will be imposing various new fees on their customers to make up for Durbins folly.
Congress set the cap not because it understands the costs and risks involved in issuing debit cards to consumers, but because they thought they knew better than the competitive market what constituted a fair price. Until Congress intervened, retailers paid the costs of the debit cards, which made sense since it made it a lot more convenient for their customers to make purchases.
(Excerpt) Read more at hotair.com ...
We pay for it one way or the other.....
I wonder what the unintended consequences of this will be?
Always raising Taxes Always Stealing from Taxpayers.
They are all 'Rats.
Always raising Taxes
Always Stealing from Taxpayers.
This is actually a win for the merchants, who had been getting scalped .95% for having their transactions “passing through” Visa / MC networks, although they weren’t a party to the transaction.
V / MC claimed it was to offset “fraud” when in fact it was just a cash cow. Notice how V / MC never got on board with “Smartchip” technology, which was a serious advance in CC fraud protection?
Bummp pass it along
I was at a credit card industry conference a few days after the Durbin Amendment was introduced.
The whole conference was in a panic, as Durbin’s stupid interference rendered the existing business models unworkable. Nobody had any idea how the card business would adjust.
One particularly egregious aspect of the Durbin Amendment was that it called for retailers to play different fees according to their size.
Durbin has no clue about the technical processing infrastructure that underlies the card system, and many were stunned about this “tiered rate” rule, which was seen to be an impossible nightmare in terms of the changes it would require to the electronic card processing infrastructure.
By the way, I don’t make my living in the card industry. I was only there because I was doing a study of it for a client. But it was amazing to see an entire industry thrown into turmoil by a stupid law that served no purpose. People at the conference were really disturbed.
IIRC, the 'smartchip' was a bad idea poorly implemented. It's really not a good idea to have RFID chips in your credit cards, because with them, they can be read from a distance. Kinda like the stupidity of the U.S. government putting RFID chips in passports to facilitate terrorists and other criminals in locating Americans in foreign lands.
Dick Durban before he dicks you!
This is political death for Democrats.
For that reason, look for the Obama Administration to pull out a big regulatory stick and beat B of A into submission on this.
Dave Ramsey ain't gonna be happy 'bout this...
What fees? I’m a member of a credit union. I have never used a bank and I never will.
Durbin’s “bright”(?) idea is exactly why I spent the morning starting the process to shift to Wells Fargo from BoA. According to the Wells Fargo branch manager, WF is currently betting, so to speak, that Dodd-Frank, or at least this amendment, won’t last.