The biggest change in the debit card industry is the Durbin Amendment, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Among other things, the Durbin Amendment limits the fees merchants pay to financial institutions on debit transactions. The amendment directs the Federal Reserve Board to create standards for deciding whether those “interchange” fees are reasonable.
So, how will these changes affect you? Since banks and credit unions have used debit card revenues to support things like free checking accounts and debit reward programs, financial institutions will need to look for ways to replace that lost revenue. As a result, you may see monthly checking account fees, annual card fees or other changes.
Consumers use debit as a safe and convenient way to pay for the things they want. While the full extent of the Durbin Amendment will not be known for some time, when those changes take effect and financial institutions react, consumers may change how they make payments, get cash or manage their accounts. Based on reports from countries that have enacted similar rules, consumers may:
- Change where they shop, depending on merchant payment policies
- Avoid or limit shopping at stores that limit debit card or small-amount purchases
- Move their funds to a single account and/or financial institution
- Use cash or checks more often
- Face new service, annual or per-usage fees
- See card loyalty programs changed or eliminated
- Enjoy fewer debit card innovations
- Have fewer payment choices at the point-of-sale
DebitSavvy.org continues to monitor and analyze these and other debit-related issues. Check back for updates. Visit the “Debit Q & A” section to send us any questions about your debit card.