As of Oct. 1, the Durbin Amendment to the Dodd-Frank Act cut the permissible fees that the banks that issue debit cards can charge merchants. The “reform” will revolutionize retail banking -- for the worse.
Sen. Richard Durbin and his merchant supporters claimed that the banks were in collusion with the big credit-card companies to charge the merchants extortionate fees. To get the amendment through, it exempted small banks, defined as those with assets of under $10 billion.
Pursuant to the Durbin Amendment, the Federal Reserve Board slashed these fees in half, costing banks in aggregate about $6.6 billion, which they were supposed to make up from direct charges to customers.