The Durbin Amendment passed last week with a significant relaxation of the originally imposed $0.12 “swipe cap.” The final version involves up to a $0.21 cap, with a possible extension of 0.05% percent of the item value.
This alteration seems to have left both sides of the debate in a state of grudging acceptance. However, it is assumed that this cap will allow a wealth shift from banks to merchant processing. This should allow for greater competition, and in turn, a better outcome for consumers. It should be noted that although this is in some cases a 50% reduction of swipe costs to merchants, that investors’ confidence in banks’ ability to make profit does not appear to have been negatively impacted; bank share values have increased since the bill's completion. Prepaid debit cards have also been exempted from the fee cap; Some governmental subsidies make use of them and it was feared that a cap may cause banks to do away with them all together. A push in the sales of prepaid debit cards is thus expected.
However, this cap should allow small businesses some breathing room from the increasing hikes in process charge rates. As the middle men between consumers who feel that they pay too much, and banks who say they’re not paying enough, this cap reduces some of the strain of finding fair ground between them.
For more information on the Durbin Amendment, see: http://www.banktech.com/regulation-compliance/231000785
For more information on the Durbin Amendment, see: http://www.banktech.com/regulation-compliance/231000785
