The DVD rental service Redbox will raise the prices it charges for DVD rentals for the first time ever in response to fees imposed by the Durbin Amendment.
The Oakbrook Terrace, Illinois-based company will raise the charge for renting a DVD from $1 to $1.20, ChicagoBusiness.com reports. Redbox cited fees it pays under the Durbin Amendment, which caps the interchange fees that banks charge to process debit card transactions, as the reason for the rate hike.
The Durbin Amendment's intent was to save small businesses money, but many merchants that primarily handle small transactions actually saw their costs rise under the new rule.
The Durbin Amendment is named after U.S. Sen. Richard Durbin (D-Ill.) and went into effect on Oct. 1 to much outcry from small businesses, the very people it was meant to help. In addition to increasing costs on small merchants, the amendment has been cited by banks that recently added card fees.
While battling the fees imposed by the Durbin Amendment, Redbox has also had to negotiate long term, multimillion dollar deals with movie studios to ensure that enough DVDs are provided at its kiosks, ChicagoBusiness.com reports.
Redbox, which is a unit of the Seattle-based Coinstar Inc., has been experimenting since June with price increases. The recently announced 20 percent increase is much small than rival Netfix Inc.'s recent price increase that saw prices rise by 60 percent last month for its DVD delivery service.