When Sen. Richard Durbin (D-Ill.) first appended an amendment imposing price controls on debit cards to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, he invoked a prominent constituent: “I had the C.E.O. of Walgreens contact me last week, and he told me that when they look at the expenses of Walgreens, … it turns out the fees that Walgreens pays to credit card companies is the fourth-largest item of cost for their business.”
He did not say why these costs should be controlled by government. Walgreens and other large retailers simply persuaded enough Members of Congress—including some who would vote against the final Dodd-Frank legislation—to back Durbin’s measure, which mandated that interchange fees charged to process debit card transactions be “reasonable and proportional” to cost.