It has only been a few weeks since the cap on debit card interchange fees was put into action, but already there is an effort to have Congress overturn the Durbin Amendment.
It was announce this past Wednesday that Representatives Bill Owens and Jason Chaffetz are leading a bipartisan effort to repeal the new regulations which have been at the center of ongoing controversy over ever increasing banking fees.
In a recent press release, Chaffetz said,
The Durbin Amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue.
The Durbin Amendment was passed as part of the Dodd-Frank financial reforms last summer with the intention of restricting debit card interchange fees so that they were ‘reasonable and proportional to the actual cost’ of processing each transaction. The average cost has risen to 44 cents and the fees have been capped at 22 cents per transaction.
Reacting to this cap on interchange fees, many banks said they would be forced to increase other banking fees to make up for the shortfall in revenue. Bank of America is just one of the major banking putting the blame for new $5 per month debit card usage fees on the shoulders of the Durbin Amendment. They are just one of many major banks who are introducing similar fees to their customers. Consumers are not happy about it, feeling that they are being charged for using their own money. Many are finding ways around it by switching accounts, moving to credit unions or paying with alternative methods such as cash or credit cards.
Kenneth Clayton, chief counsel for the American Bankers Association supports the attempts to repeal the amendment. In his recent statement, Clayton said,
This unprecedented transfer in costs from retailers to consumer – the result of government price fixing – has resulted in consumers paying higher fees for basic bank services.
In the meantime, those supporting the Durbin Amendment say that the increasing fees have less to do with the cap on interchange fees and more to do with banks greed.
Senator Dick Durbin, who authored the law said,
After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers.