Durbin amendment and its after-effects
With times, banking sector has evolved too and has been completely revolutionized the way it worked couple of decades ago. Now there is no need for carrying cash and you can easily pay for the purchase through cards like debit as well as credit card. Now carry cash is unfashionable and plastic form is considered safe and efficient.
Making purchases from debit card is not as simple as it is seen. You pay every time a little interchange exchange fees when you swipe your card. The convenience of plastic money is with a price. People don’t mind paying a little extra given the comforts and advantages plastic money has but off lately, due to tough economic conditions and slow down, America introduced Durbin amendment considering it to be people friendly and with the sole motive of increasing savings of customers but sadly it has not happened so far till now.
As banks used to earn billions of dollars from small interchange fee they used to charge, many banks anticipated loss of revenues following Durbin amendment implementation. To make up for these losses, they introduced monthly fees for debit accounts and taken off free checking accounts. This decision of Banks to negate Durbin amendment loss is condemned by public and politicians alike. Now they are busy in gathering the votes by standing on the sides of public but congress is the one who created this Durbin amendment and ate banking profits. All of us were happy with paying the interchange card fees but politicians showed us golden dream of increased savings and general public was fooled by them. Even President of USA, Mr. Obama criticized Bank of America by saying “You don’t have some inherent right just to – you know, get a certain amount of profit. If your customers – are being mistreated, treat them fairly and transparently.”
Press and media also condemned Durbin amendment and termed the levied fees on debit accounts and withdrawals of incentives and rewards as Durbin tax. All this happened because there is little transparency in banks. Already American people pay a lot of taxes and addition of this tax increased their woes but banks should have been more sensitive to tough economic conditions and should not have introduced new fees after Durbin amendment. After all, given their big sizes and filled-to-neck vaults, they could have easily absorbed the loss caused due to reduction of fees after Durbin amendment.
Visit http://www.worldpay.us/Durbin.html to know positive and negative aspects of Durbin amendment.
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