The Community Comments on the Fed’s Debit Plan

Disbelief. Sadness. Confusion. 

These are among the emotions our payments community is experiencing after the Federal Reserve recently released their initial response to the Durbin Amendment. In their draft proposal for debit card interchange fee regulation, the Fed declared 12 cents per transaction is the most banks will be allowed to collect from merchants. The Fed also released two proposals for the number of networks issuers have to offer on their debit cards, weighing the scenario of either two independent PIN and signature networks, or at least two independent PIN networks and two independent signature networks. (More details) readers have been quite vocal with their questions and comments on the Fed’s Durbin annoucement.  We’ve compiled some the reactions, and please feel free to add your own below.


“The biggest concern and issue is that Congress and regulators do not understand the card business — debit or credit. In a recent news report by a well-known reporter, they referred to the Amendment saving the consumer money, because now they (the consumer) would only have to pay 12 cents a transaction. Our biggest failure as an industry is in convincing merchants (and Congress for that matter) that there is a cost to all transactions — cash, check, and card.” – Fran Dale


“Looks to be the end of Affinity Debit Cards!! I still want my value (points), so I’ll shift to credit. Sad news is the merchant ends up paying more.” – John Tharpe


“I believe this proposal will not become law. It is a totally unrealistic fee that is the direct result of massive lobbying by national retailers (think Wal-Mart). Wal-Mart has been capable of controlling and driving down its costs of almost everything, with the exception of the fees they pay for payment transactions. That is something Wal-Mart in particular has hated for decades. I believe that before the new rules are finalized in April, the banking lobby — which includes almost every hometown banker and collectively are HUGE contributors to virtually all Congressmen and Senators — will have exerted its power to dramatically alter the final outcome. They may even have the votes in the new Congress to repeal this bill or modify it.” – Greg Blalack


“I think it is short-cited thinking to feel that the banks won’t still find a way to profit from debit transactions. How does an $8.95 monthly fee for a debit card sound or a checking account fee of $9.99 to just have an account? Do they really think that any of the reduction in cost to a merchant will be passed on to consumers? The government just legislated additional profit for merchants and additional costs to consumers as a whole.” – Rick DiMattio


“Our retail clients are telling us that they plan to reinvest savings realized from lower interchange expenses into a variety activities, including reducing consumer prices (most visibly on higher-ticket purchases), upgrading POS and back-office systems, remodeling stores, investing in new locations, increasing payroll and completing other deferred initiatives.” – Dan Stiel


“Does anyone else think this could be detrimental to the ISO?” – Pawel Blaz


“This type legislation and action towards V/MC has been an aim of Dodd/Franks et. al. liberals forever. Action is greatly dependent upon Republican persuasion and power. Of course, this is seen as a win for the little guy, although Wal-Mart and the like are lobbying for it. If it happens and if I am a retailer, I will push for use of the debit pin-based application & ergo will curb ISO revenue. Next up is helping the ‘little’ guy with IC. This business will continue to see consolidation and margin cuts. Look at history.” – David Ison


“It could reduce profit margins for ISOs… Let us wait and see. If it becomes a bill on the Hill, banks will lobby it, and there is a new Congress also. A draft is just that. It will change and evolve as more discussions and lobbying happen.” – Don Esch


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