Washington, D.C. — In 2010, the Durbin Amendment was enacted as part of the historic banking bill, the Dodd-Frank Act, and established a ceiling on debit card interchange fees — the cost that merchants pay each time a customer makes a purchase using a credit or debit card. While this legislation was intended to lower costs for consumers, when studied, the expected price reductions never came to pass, and in some cases, prices actually rose.
Lawmakers are now considering implementing a similar model to cap interchange fees for credit card transactions. Today, the Progressive Policy Institute (PPI) released a new report “No Change Needed: Congress Should Rethink Extending the Durbin Amendment to Credit Card Interchange Fees” detailing why extending the law to interchange fees for credit cards would harm consumers.
The report, written by Paul Weinstein Jr., Senior Fellow at PPI, outlines how numerous studies found no evidence that the cap on debit card interchange fees has led to savings for consumers. Furthermore, there is considerable evidence that extending the Durbin Amendment to credit cards would not only fail to provide consumers with any savings, it could actually leave them worse off.
“Despite how well-intended the Durbin Amendment was, the fact remains that the law had little or no impact on prices, and in some cases, may have even led to higher costs for consumers,” said Paul Weinstein. “Extending the Durbin Amendment to credit card interchange fees could ultimately hurt consumers by ending access to rewards offered by credit card providers, and increase security risks for cardholders.”
Read and download the report here.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
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Media Contact: Amelia Fox, afox@ppionline.org
