Source: Electronic Payments Coalition
New survey data released by Morning Consult shows that a majority of consumers support repeal of the merchant markup, also known as the Durbin Amendment of the Dodd-Frank Act.
Retailers have pocketed $36 billion from the Durbin Amendment, turning it into nothing more than a merchant markup that pads retailers’ bottom lines. More than five years later, consumers are saying enough is enough.
More than six in ten consumers think the Durbin Amendment should be repealed if merchants are not passing the savings on to consumers. A study by the Federal Reserve confirms that merchants are not handing over the savings they receive from the Durbin Amendment. Instead they are pocketing six to eight billion dollars every year since the regulation was implemented—all of which should have been passed along to customers in the form of lower prices.
By a two-to-one margin, consumers think interchange fees should be negotiated by merchants and processors, not by the federal government. This same sentiment was even shared by Former Financial Services Committee Chairman Barney Frank when he reflected on the law after it passed, “I’m not a fan of the Durbin amendment. I think that’s not going to help the consumer. That was intervening in a fight between two economic groups that should be left to their own.”
Not only was Barney Frank right in that consumers would be hurt, the Durbin Amendment resulted in negative consequences for community banks, credit unions, and small businesses as well.
The amendment’s price controls have had numerous unintended side effects, contributing to the loss of consumer benefits like free checking, increased costs for smaller community financial institutions, and effectively forcing small retailers to lose important discounts on debit card transactions.
By the same two-to-one margin, consumers think more government regulation will stifle innovation.
Instead of simply pocketing interchange revenue like the big box retailers have done, financial institutions invest in supporting the global payments network and developing innovative security technologies that protect consumers’ sensitive financial information.
“It is clearly time to repeal the Durbin Amendment, which is nothing more than a merchant markup that has served the special interests of big box retailers for far too long,” said Molly Wilkinson, executive director of the Electronic Payments Coalition, “Customers are not benefitting from the price controls on debit interchange transactions and this new data shows consumers support ending this failed policy.”
Legislation to repeal the Durbin Amendment has been introduced by Chairman Jeb Hensarling of the House Financial Services Committee and by Representative Randy Neugebauer.
Morning Consult conducted a national survey of 1,999 registered voters from October 13-15, 2016. Results from the survey have a margin of error of plus or minus two percentage points.