Two legislators have announced they will file a bipartisan bill in the House to repeal the Durbin amendment and remove its cap on debit card interchange.
Rep. Jason Chaffetz (R-Utah) and Rep. Bill Owens (D-N.Y.) said their measure would restore balance to the electronic payments system.
"This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market," said Chaffetz. "The Durbin amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher, and in some cases new, fees to make up for lost revenue."
The Durbin amendment and its regulations capped debit card interchange at roughly 21 cents per transaction for large-asset debit card issuers, down sharply from the previous average of 44 cents. A series of large banks, most notably Bank of America, have blamed the amendment for having to add fees to debit card use.
"Repealing the Durbin amendment fixes the disastrous consequences of this bill. Consumers everywhere are living on the margins and making do with less. Congress must repeal this egregious provision that increases the costs of doing business on everyone," said Chaffetz.
"The Durbin amendment is harmful for community banks, credit unions and the communities they serve," said Owens. "While Congress clearly intended to exempt these smaller institutions from the cap on interchange fees, it's clear the Durbin amendment will have unintended costly consequences for my constituents and their checking accounts."
Industry organizations, which fought the passage of the Durbin amendment, moved quickly to applaud the prospect of its repeal.
"The Durbin amendment was forced into law despite repeated warnings from consumer advocates, regulators and economists on the dire consequences that await consumers," said Trish Wexler, spokeswoman for the Electronic Payments Coalition, an industry group that opposed the amendment.
"We now see this unfortunate situation for consumers playing out in the form of higher costs to own and use a debit card, with no promise from merchants that any of their savings will be passed on at the register…. We urge Congress to act quickly to get rid of this unprecedented and harmful amendment once and for all," she added.
NAFCU also weighed in on the topic.
"NAFCU thanks Reps. Chaffetz and Owens for leading the charge to correct the hasty and misguided Durbin amendment," said NAFCU Executive Vice President for Government Affairs Dan Berger.
"In just the short period of time since the rule went into effect on Oct. 1, we have seen this amendment reach into the wallets of average Americans through increasing bank fees, just as we had feared," Berger added
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