Today the House Financial Services Committee held a hearing on the Financial CHOICE Act and the need for reform. Expert witnesses testified that the Durbin amendment has failed and that large retailers have not passed on their cost savings to consumers as promised.
Following a question from Rep. Ted Budd (R-NC) on why the policy hasn’t helped consumers, Norbert Michel, research fellow at The Heritage Foundation, stated during the hearing, “The idea that we were going to get rid of a regulation for a small group of large retailers and those retailers were going to just pass those cost savings directly back to consumers is fantasy.”
Since the Durbin amendment went into effect six years ago, retailers have pocketed more than $6-8 billion dollars annually from these unfair mandates. More than 6 in 10 consumers think the Durbin amendment should be repealed if merchants aren’t passing the savings to customers. A study by the Federal Reserve Bank of Richmond found that 99 percent of retailers have either raised prices or left them unchanged since these price controls became law.
John Allison, former CEO of BB&T, strongly criticized the Durbin amendment’s price controls during the hearing, stating that “price controls never work.” He also noted that the Durbin amendment “is a huge subsidy for big merchants… at the expense of low income consumers.”
Plus, small merchants prefer value over price controls in their interchange partnerships. A study from Javelin Strategy & Research underscores that this provision was for the big box retailers instead of small merchants, community banks, and credit unions. It’s time to repeal the Durbin amendment and move forward with ending these unfair mandates and provisions.
“Over the past six years, retailers have pocketed $42 billion at the expense of their customers, thanks to the Durbin Amendment’s price controls,” said Molly Wilkinson, executive director of the Electronic Payments Coalition. “Multiple studies and consumer surveys agree that not only has this policy failed to provide any benefits to consumers or small businesses, but it should also be repealed. Today’s hearing and expert witnesses confirmed that the Durbin amendment unfairly hurts small businesses, customers, credit unions, and community banks. We thank Chairman Hensarling for his efforts to repeal this broken policy and Congressman Ted Budd for leading a conversation on the Durbin amendment’s failures.”
About the Electronic Payments Coalition
The Electronic Payments Coalition (EPC) is a coalition of payments industry stakeholders, such as credit unions, community banks, trade associations, payment card networks and banks that speaks on behalf of the payments industry to protect the value, innovation, convenience, security and competition that exists in the modern electronic payments system. The EPC educates policymakers, consumers and the media on the system’s role in economic growth and the importance of consumer choice, security, innovation and stability for the continued growth of global commerce.