During a press conference on Tuesday, Sen. Dick Durbin (D-Ill.) defended his legislation, commonly known as the “Durbin Amendment,” which limits interchange fees.
The Durbin Amendment, a provision in the controversial Dodd-Frank Wall Street Reform and Consumer Protection Act, caps interchange fees at 21 cents per debit transaction.
The move was intended to cut into the profits of banks and credit card issuers in order to save merchants the cost of accepting debit cards.
Originally, the argument for the Durbin Amendment was that merchants would then pass their savings onto consumers, but once the legislation passed, it became apparent that merchants were not inclined to pass on the savings.
After the legislation passed earlier this summer, Durbin said his rule “will allow merchants to offer discounts to their customers and restore common sense and fairness to this broken system,” according to Paymentnews.com.
“The retailer will be more profitable,” Durbin said, ATMMarketplace.com reports. “That’s what’s behind this.”
Durbin was joined by Rep. Jim Cooper (D-Tenn.) at the press conference. Both members maintained that consumers will see economic benefits once the regulations are implemented.
Consumers however, are already seeing economic disadvantages with their debit card rewards programs being eliminated and new bank fees.
Banks have reacted swiftly in order to recoup the amount lost in interchange fees, which were used to subsidize hefty fraud costs and rewards programs.