News

KeyCorp expects to lose up to $60 million a year because of Durbin Amendment

The Durbin Amendment could cost KeyCorp up to $60 million in revenue a year, the bank wrote last week in a filing with the Securities and Exchange Commission.

When the Federal Reserve released its proposal language for the Durbin Amendment in December, it suggested capping the amount on fees that banks charge merchants for debit card transactions at 12 cents per transaction. KeyCorp estimated that the proposal would shave up to $100 million off its annual revenue, according to the Wall Street Journal.  

Last month, the Fed issued its final rule that included a less restrictive cap on the interchange fees. With a 21 cent cap, plus a fraud allowance, KeyCorp executives are still predicting significant revenue cuts.

"If interchange fees are set at the maximum amount allowed by the Regulation and we receive the fraud adjustment amount, we estimate that the impact on our debit interchange revenue stream will be an annualized decline of approximately $50 million to $60 million before any potential offsets from other fees or charges that may be implemented," Keycorp wrote in the filing, according to the Wall Street Journal.

The Cleveland-based KeyCorp is one of the largest bank-based financial services companies in the U.S., with assets of approximately $90 billion. It is expected to announce its second quarter 2011 earnings on Tuesday.

Comments are closed.