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Passed as part of the Dodd-Frank Act, the Durbin Amendment allows the government to set price controls on fees for debit card transactions. Before the Durbin Amendment, such fees were not capped, and issuers of debit cards, such as credit unions and banks, were encouraged by a competitive market to offer consumers benefits like reward programs and free checking accounts. Those days quickly faded as the days of Durbin ushered in a darker day for the consumer.

The Durbin Amendment must be repealed so that the consumers can once again enjoy the benefits of the free market.

Here are the top 5 reasons Durbin is failed policy and must be repealed.

1) Unfulfilled promises. The promise made to the consumer that they would receive the benefits of retailers receiving a fee break was never fulfilled. Recent studies show that most large retailers have seen significant cost reductions as a result of the Durbin Amendment, yet to date there is no evidence that those cost savings have been passed-through to consumers.” In fact, since Durbin was passed, 77% of merchants have not changed prices, and 22% have actually increased prices. 

2) Bring back free checking accounts. Credit unions and banks that would have normally received fees from the average debit card swipe are now receiving less and have been forced to cut out free checking accounts, something consumers enjoyed for years before Durbin came around. Before Durbin was enacted in 2009, 76 percent of banks offered free checking accounts. In 2011 that number fell to 45 percent, and in 2012 it plunged to just 39 percent.

3) Growth in America’s “unbanked” population. As a result of the decline in free checking accounts under the Durbin Amendment, many low-to-middle income Americans have been pushed out of the banking system. According to a recent study by George Mason University, the Durbin Amendment has led to over 1 million Americans being unbanked. A regressive trend that falls hardest on America’s poor.

4) The false revenue narrative. While proponents of the Durbin Amendment claim that issuers of debit cards have seen increased revenue since the amendment passed, this narrative is blatantly misleading. While there has been growth in total interchange fees, this is a result of expanded credit and debit card use in recent years – not a result of the Durbin Amendment. For instance, data shows that credit and debit purchases have increased to 46 percent of total consumption value, up from 37 percent in 2008.

5) Reward the consumer not the retailer. Finally, credit unions and banks have been forced to scale back and practically eliminate many forms of debit card reward programs. These programs are vital towards rewarding the consumer for stimulating the economy with their hard earned money.

In essence, the Durbin Amendment is failed policy. Since enactment, Durbin has failed consumers by not passing the savings on as promised, eliminated the ability of many consumers to have their money kept in bank accounts that charge monthly fees, and has led to an increase in unbanked Americans. The 115th Congress and President Trump should act to ensure the Durbin Amendment is repealed.


Photo credit: Arend