Winners and Losers after Durbin amendment
Durbin amendment was implemented last year and it has been among most actively discussed amendment of recent times as it affected consumers, buyers and sellers alike. Talking theoretically, with Durbin amendment consumers or buyers were to winners and banks were supposed to bear the losses as with this legislation the interchange card exchange fees was reduced to 70% of what was charged earlier.
Sadly, most of people are still unaware of effects of Durbin amendment and don’t know how it has impacted them. Due to decrease in interchange fees, revenues earned by issues and the banks were supposed to decrease but which would have benefitted was end consumers. But sadly it has not happened in true terms. Most of merchants don’t have right plan to enjoy the benefits provided by Durbin amendment. On the other side, banks have invented new ways of charging customers and most is in form of hidden fees. Also, banks could start charging for basic transactions to compensate the revenue loss caused by Durbin amendment. But on the other hand, it can have negative impact on customers too. At present around 35% of non-cash transactions in states are through debit cards. Due to other increased fees, consumers can opt out using debit cards all together or can switch to smaller banks which have less than $10 billion in banks as Durbin amendment has affected only those banks which have more than $10 billion in assets. Another way to compensate for the revenue loss is that issuing banks can start charging either a monthly or annual fees for the card. Worst can be charging a transaction fee or both of these.
Many banks have withdrawn various incentives as well as reward schemes they use to offer on debit cards to compensate for the loss of revenue after implementation of Durbin amendment. This has led to exodus of consumers and now they prefer paying more in cash, in check or through credit cards.
However Durbin amendment was implemented keeping in mind that it will lead to increase in savings. However, still many consumers are not getting their due share. This is because either merchants or consumers have no idea for what they are being charged, how much fees is charged for which type of transactions. They need to understand this process thoroughly if they want to enjoy benefit which Durbin amendment provides. Thus, it will very important to educate people about Durbin amendment.
Get more information about Durbin amendment from http://www.worldpay.us/Durbin.html.
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