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Repealing Harmful Durbin Amendment Price Controls is Meaningful Reform

| Electronic Payments Coalition

WASHINGTON, D.C.—The Electronic Payments Coalition (EPC) applauded Congressman Jeb Hensarling, chairman of the House Financial Services Committee, for including the repeal of the Durbin Amendment’s harmful federal price controls as part of his outline of The Financial CHOICE Act this morning.

EPC executive director Molly Wilkinson praised the Chairman’s efforts saying, “The Electronic Payments Coalition applauds Chairman Hensarling’s vision and hard work on The Financial CHOICE Act which provides commonsense reforms that promote economic growth for all Americans. Of critical importance to the coalition is repealing the harmful federal price controls of the Durbin Amendment and we look forward to working with the Chairman on ending this failed policy.”

The Durbin Amendment was included as a last-minute addition to the Dodd-Frank Wall Street Reform Act on behalf of special interest groups representing big box retailers. Market-manipulating price controls were forced on interchange for debit card transactions. Although retailers promised to pass along savings to consumers in the form of lower prices, they instead have pocketed $36 billion since enactment, turning the amendment into nothing more than a merchant markup that pads retailers’ bottom lines while consumers see no relief at the register.

Multiple studies have proven that retailers have broken their promise to consumers and have not passed along the estimated $8 billion in annual savings to their customers. A survey of merchants conducted by the Federal Reserve Bank of Richmond concluded that merchants have kept their prices the same or, in some cases, have even increased their prices.

Furthermore, retailers continue to tout a misleading and inaccurate study that claims consumers have saved and employment numbers have increased. This study is fundamentally flawed and has been fully rebutted by EPC with a factual assessment of price controls on debit card transactions, revealing the true damage to consumers the merchant markup has caused since 2011.

Small community banks and credit unions were supposed to be exempt from the Durbin Amendment; however, they—along with consumers and small businesses—have also fallen victim to these harmful price controls. Smaller banks and credit unions typically have a far lower number of debit transactions than covered issuers, and consequently are less able to access the economies of scale enjoyed by larger issuers to help absorb costs.

Supporters of the amendment fail to account for the many thousands of small financial entities that sustain their local communities and help grow small businesses, not to mention the consumers that rely on community banks and credit unions for their banking services.

Chairman Hensarling’s inclusion of repealing the artificial price controls set by the Durbin Amendment is a step in the right direction to help consumers and small businesses. Eliminating this failed policy would provide meaningful financial reform after years of merchant markups.

Kasia Mulligan

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.

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