And so it proved. Surveys demonstrated that as soon as the Durbin Amendment was passed – even before it went into effect – banks started raising fees and cutting back on free services. The lobby group for continued controls has argued that this cannot have been an effect of Durbin because the law had not got into effect. Yet, people react to what they know is going to happen, and don’t wait until the day of effect to act. The result has been that poor bank customers have been hit hard, with a million people forced out of the banking system as a result of increased fees.
There is actually a natural experiment on the effects of interchange fees caps. The Durbin Amendment exempts small banks of under $10 billion in assets from the fee cap. Those banks have not needed to seek revenues elsewhere and so continue to offer free checking and other services. Bizarrely, some people argue that the continued existence of these services validates the need for interchange fee caps and that the amendment did not increase bank fees.