The company, which allows its customers to remotely pay on parking meters, said in an email to customers that the fee for the service would increase from 32 cents to 45 cents due to the controversial Durbin Amendment, U.S. News & World Report reports.
The Durbin Amendment, a provision of the 2010 Dodd-Frank Act enacted one year ago, capped the amount financial institutions could charge merchants to process debit card transactions. Before the provision took effect, merchants paid on average 45 cents per transaction.
Since the Durbin Amendment took effect, however, card companies can charge a maximum of only 21 cents, though they have also eliminated merchant discounts for small purchases, and retailers must pay the maximum amount regardless of transaction size.
“Our processing costs have tripled,” Laurens Eckelboom, the executive vice president of marketing at Parkmobile, said, according to U.S. News & World Report. “The debit interchange fees were capped without regard to transaction size. We deal in small average transactions so that is damaging since debit cards are used more frequently to pay for small transactions.”
Other small-ticket retailers have also been affected by the provision. Redbox announced last year that it was raising DVD rental prices by 20 cents, citing “the recent increase in debit card interchange fees as a result of the Durbin Amendment.”
“This is yet another example of how the Durbin amendment has failed those it claims to help,” Trish Wexler, the spokeswoman for the Electronic Payments Coalition, said, U.S. News & World Report reports. “Whether buying a big screen television of paying for parking, the interchange fee is the same. Government intervention in the interchange system might boost profits for giant retailers but it clearly harms the interests of American small businesses.”
Companies have come up with an alternative solution to the fees, however. Parkmobile Wallet allows customers to digitally add money to the wallet, and parking meter fees are deducted from the total balance.
Eckelboom said that the system reduces transaction costs, as the company is charged only when the customer loads the wallet rather than every time a customer uses their debit card to pay a fee. Customers that use the system will pay a 30 cent fee per transaction as opposed to the 45 cent fee that will take effect this week for customers who don’t use Parkmobile Wallet.
“In the end, credit card companies have decided to maximize [transaction fees] regardless of ticket size,” Eckelboom said, according to U.S. News & World Report. “What we did not want to do was pass along those fees without providing an alternative solution.”