Debit Data Reaction: Are Consumer Benefitting from Interchange Caps?
The American Bankers Assocation expressed doubts over the effectiveness of interchange fee regulation this week, following the Federal Reserve Board's issue of updated fee data in post-Durbin markets.
"While it's too early to see the Durbin Amendment's full effect on community banks, its impact on consumers and small businesses has never been more apparent," the ABA said in an official statement.
"While retailers pocket $7 billion annually from lower interchange costs, their customers pay higher fees as institutions adjust to government-imposed losses in revenue. At the same time, many small businesses now face higher interchange rates for low-dollar transactions, a classic example of strange things that occur when government creates unnatural pressures to make up for lost revenue. 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."
Meanwhile, Bloomberg Businessweek notes that the smaller institutions that regulators declared exempt from new laws "have so far escaped unscathed." Exempt bank fees are essentially unchanged, the new data show — offering some banks an incentive to keep their total assets below $10 billion, Bloomberg says.