Even before it has a chance to see the light of day, the Durbin Amendment could be repealed.
According to reports coming out of the nation's capital, the bill that aims to overturn how Interchange fees are assessed is facing strict opposition, with some lawmakers admitting the plan hasn't been adequately researched and may present more of a financial burden than consumers and small financial institutions should bear.
Merchant Warehouse has stated, since before the bill was placed on the president’s desk in July, that it was an all-around ill-conceived piece of legislation, as it wasn’t well thought out and would benefit Big Box retailers, hurting consumers.
Many industry thought leaders speculated that banks, needing to recoup revenues lost from a change in the swipe fee, would use consumers to regain the financial losses through “maintenance fees” charged for accounts that dipped below a certain minimum balance, or take away such perks like free checking. It wasn’t long after the bill was signed that these predictions came to fruition.
Just a few months ago, card-issuing networks proposed a two-tier system in which banks with assets amounting to more than $10 billion in assets would be assessed an interchange fee of $0.12 as the limit, and those financial institutions with less than $10 billion in assets would not be subject to the limit. That proposal hit a snag, with smaller banks claiming that if larger banks charge less for debit cards, they too would be forced to charge less to remain competitive, therefore suffering the slice of a double-edged sword.
Time will only tell if the bill is overturned, or if the Fed meets it April deadline to decide what the new fee, which should be determined as “fair and proportional” for Interchange will be set at, but repealing it wouldn’t be a bad thing.
“I compare this to the instant replay rule in the NFL,” said Henry Helgeson, co-CEO of Merchant Warehouse. “To overturn the ruling on the field the evidence has to be conclusive. The evidence here is conclusive that little thought and consultation went into this bill, it’s bad for consumers and it will be repealed.”