Data disinters Durbin amendment debate

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WASHINGTON, May 2 (UPI) -- Six months after a new cap on debit-card "swipe fees" was put into effect, average fees have dropped, the U.S. Federal Reserve said.

Fees averaged 43 cents per transaction for use of a debit card before the Fed changed the rules as stipulated in the so-called Durbin amendment, a late addition to the Dodd-Frank financial overhaul bill that put a cap on the fee for financial firms with more than $10 billion in assets.

The average swipe fee for larger firms has dropped to 24 cents, while remaining at 43 cents for smaller firms, The Hill newspaper reported Wednesday.

Arguments for and against the Durbin amendment were revisited with the fresh data.

"Small banks have been completely unaffected by the changes," said Brian Dodge, senior vice president for communications for the Retail Industry Leaders Association.

Bankers, however, said time would tell on how reasonable or effective the cap on swipe fees would be.

Since the fee limits were put in place, big banks have warned that pressure to produce profits would simple force them to replace the earnings from lower swipe fees with higher charges for other financial services.

"The Durbin Amendment's primary beneficiaries continue to be big-box retailers who want to reap the benefits of our nation's payments system without paying for it or passing along their savings to customers as promised," said Frank Keating, president of the American Bankers Association.

"ABA firmly believes the Durbin Amendment's small-bank exemption can't work long-term," he said.

Representing some of those smaller banks, Bill Cheney, president and chief executive officer of the Credit Union National Association, said, the "jury is still out."

"Credit unions continue to be concerned that market forces will ultimately drive down the fees that the exemption for smaller institutions is intended to protect," Cheney said.

The measure is referred to as the Durbin amendment after Sen. Dick Durbin, D-Ill., who pushed for the swipe fee limits.