The Electronic Payments Coalition recently released an analysis of the impact of the Durbin Amendment to the 2010 Dodd-Frank Act. It differs sharply with prior positive reports on the amendment's impact on consumers. Citing independent research by the Federal Reserve, the new analysis dispels claims that the amendment's mandated cap on debit card interchange rates has led to job creation and consumer savings, according to the EPC.
The study, titled Durbin Amendment Has Not Led to Consumer Savings or Employment Gains, Contrary to Retailer Claims, is critical of Durbin Amendment supporters who maintain the amendment has generated an estimated $8 billion in annual interchange fee savings in the form of lower consumer prices and added payrolls. Many Durbin supporters have cited a 2013 study by economist Robert J. Shapiro that contains numerous inconsistencies, the EPC stated.
"The study is fundamentally flawed and presents an inaccurate picture of the true impact of the Durbin Amendment," said Molly Wilkinson, Executive Director of the EPC. "This is a failed policy that only benefits the special interests that pushed for it ‒ big-box retailers."
Retailers have applauded Durbin Amendment reforms, claiming that lower pricing and job creation have benefitted consumers. The National Retail Federation, National Association of Convenience Stores and Merchant Trade Association have drawn examples from the Shapiro study to show the amendment's positive effect on the U.S. economy.
The EPC challenged the methodology used in Shapiro's 2013 report and stated that merchants are the "sole beneficiaries" of any benefits related to debit interchange price caps "at the expense of consumers and the financial Industry."
The EPC referenced the following as inaccuracies in the 2013 report:
The Durbin Amendment has led to increased bank fees and related costs that have harmed, not helped, American consumers, the EPC noted. Additionally, any job gains resulting from Durbin reforms were more than offset by job losses in the financial sector. Merchants may choose to ignore these outcomes as they pocket additional profits from Durbin, but the "economic consequences are all too real for the millions of U.S. consumers who experience them," the EPC wrote.
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