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High-end stores, not consumers, benefiting from Durbin Amendment

In an effort to increase revenue for merchants on debit card transactions, the Durbin Amendment put caps on the fees those merchants have to pay, but some retailers benefit more from the fee cap – high-end retail stores.

Before the Durbin Amendment, $1,000 purchases cost a retailer $15.02 in swipe fees, Mainstreet.com reports. Now these retailers only pay 72 cents per transaction.

According to a report by industry analyst Javelin Strategy and Research, merchants whose average transaction was $38.03 saw expenses related to the debit fee nearly cut in half.
As a result, smaller stores with a lower transaction average of $11 actually pay more than before the introduction of the legislation.

“Businesses with small dollar transactions, like a coffee shop, are suffering under Durbin,” Beth Robertson, the director of payments research at Javelin, said, MainStreet.com reports.

Robertson says that under the new fees, small retailers pay approximately 22 cents for an $8 transaction. Before the fee cap, an $8 transaction would have only cost 14 cents.

Small businesses are not the only group not seeing the benefits of the Dodd-Frank provision.

The Durbin fee caps cost U.S. households about $427 annually, according to the National Retail Federation.

The NRF also estimates that the fee caps generate $50 million for banks every year.

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