As representatives from the retail industry hit Capitol Hill this week to lobby members of Congress, American Bankers Association President and CEO Rob Nichols called on lawmakers to repeal the Durbin Amendment, which imposed government price controls on debit card interchange. In an op-ed published in The Hill newspaper today, Nichols noted that the amendment — an eleventh-hour addition to the Dodd-Frank Act — “represents a loss of tens of billions of dollars in consumer value.”
The controversial amendment has had negative consequences for consumers, small businesses and the banks that serve them, Nichols said. Since its passage, it has caused many banks to limit various product offerings, such as free checking accounts, and limited transaction processing choices for small businesses. At the same time, he added, retailers have reneged on their promise to pass along lower prices to their customers in exchange for lower interchange fees.
“Retail stores would howl if Congress capped the prices of the food or clothing or equipment they sell,” Nichols wrote. “It’s no different in financial services. Bankers strongly support policies that promote a vibrant retail sector, but onerous price caps and regulations hurt consumers more than they help grow the economy… Simply put, the Durbin amendment extracts a high price from many for the benefit of a few.”