Addressing the 'D' Word

Chris McWilton | February 16, 2011

(From MasterCard's "The Heart of Commerce" Blog)

Included in the Dodd-Frank Act last year, the flawed Durbin Amendment represents government-instituted price fixing of debit interchange – the fees that merchants incur for the convenience and protection of accepting debit cards.

Currently proposed regulations cap these fees at a fraction of their previous level. If enacted, the result is more than $14 billion tax on consumers each year, upsetting the previously well-balanced, self-regulated payments system and drastically reducing revenue for the issuing community.

With this lost revenue, banks will need to balance their books and will be forced to consider increased fees for consumers or reduced access to banking benefits and services. At the same time, the Durbin Amendment does not require merchants to pass their newfound savings onto consumers.

Look no further than recent media stories for proof on how “Durbin Fees” might play out for bank customers.

This Amendment was passed in an unprecedented process without any Congressional review or vote in the House. Since then, these price controls have been publicly condemned by both Democrats and Republicans for delivering little to benefit consumers – and in fact may actually result in significant harm. Changes of this magnitude should not be imposed without serious thought, analysis and study of the long-term consequences to the financial system and the larger US economy.

The Durbin Amendment will no doubt have an unintended, negative impact on the millions of Americans who rely on them as a core payment tool for their daily financial management needs. Take the example of a working family who uses their credit union debit card to purchase groceries, buy gas and pay bills. Once banks are forced into raising fees, this family will be required to pay for their checking account and other services that were previously free. If the family can’t afford these increased costs, they’ll l be pushed out of the banking system.

Consumers have demonstrated a resounding affinity for debit cards as a critical component of their personal financial management. Does government really want to take this choice out of Americans’ hands?

Tomorrow’s Congressional hearing is one step. It’s important that voters express their concern and let their congressional representatives know that these unintended consequences cannot be tolerated.

Chris McWilton
President, U.S. Markets
MasterCard Worldwide




The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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