After Financial Committee Hearing, Fate of Durbin Amendment Remains Unclear

04th May 2017
Callum Godwin
Callum Godwin

Since President Trump first took office in January 2017, the news has been flooded with calls for regulatory change and “repeal, repeal, repeal” seems to be the call that rings out the loudest.

With the likes of Obamacare and NAFTA on the cutting block – the Durbin amendment seems just another possibly casualty of an administration focused on making sweeping changes. Although recent reports suggest a total repeal is unlikely, it is imperative that merchants act now to ensure Durbin is strengthened.

In this article, we take a look at what’s happening with the Durbin amendment and what we think the best course of action would be for merchants. If you’d like to speak to me in more detail about the article, please email me at

The Durbin amendment, passed in 2010 as part of The Dodd–Frank Wall Street Reform and Consumer Protection Act, was introduced to protect merchants against excessive debit card swipe fees by capping interchange charges. Despite the regulation, and being the largest card market in the world, the US actually has some of the highest swipe fees in the industrialized world, and US merchants have long been crippled by network giants.

On Wednesday 26th April 2017 merchants organized by the National Retail Federation and the Merchants Payments Coalition traveled to Washington, D.C. to lobby for the preservation of the amendment to Congress. Many of the merchants making the trip attended the House Financial Services Committee hearing, where committee Chairman Jeb Hensarling, R-Texas formally introduced his Financial CHOICE ACT. The bill could significantly change Dodd-Frank (and along with it the Durbin amendment), with Hensarling, other Republicans and many bankers arguing it has placed too many restrictions on the industry and accusing merchants of failing to pass savings on to consumers.

Since the hearing took place, the Committee has issued a press release stating:

Financial Services Committee Chairman Jeb Hensarling (R-TX) today formally introduced the Financial CHOICE Act, the Republican alternative to the failed Dodd-Frank Act which has contributed to the slowest economic recovery since World War II. The Financial CHOICE Act, H.R. 10, will end taxpayer-funded bailouts of large financial institutions; impose tougher penalties on those who commit financial fraud and insider trading; demand greater accountability from Washington regulators, and relieve well-capitalized banks from growth-strangling regulations that slow the economy and harms consumers.

Committee statement

CMSPI agree that the Durbin amendment is its current form is not robust enough to withstand the opportunistic techniques used by the networks to introduce new and increased fees to fill the void left by interchange regulation. The supposed $11.4 billion of annual savings (based on 2013 volumes) promised from the Durbin amendment was quickly dwindled to $6.1 billion after higher than expected caps and card processor fee absorption; this diminished even further to $3.1 billion in savings after an increase of over $3 billion in additional and amended network fees was added to merchant’s bills. CMSPI believes the answer is reform, not repeal, and that the interests of merchants and consumers must be protected against issuers, processors and banks.

Recent reports suggest that a repeal of Durbin is unlikely to be included in the final Financial CHOICE ACT. The amendment’s supposed retention presents a timely opportunity for merchants to make a significant impact on legislation that greatly affects their bottom lines by billions of dollars a year. As many banks clamor for a total repeal and merchants lobby for its retention, now is the ideal time to reform Durbin and ensure it is working in the best interests of merchants and consumers.

Like much of the US has been since inauguration day, the payments industry is on the edge of its seat as it waits to see what effect President Trump and his administration will have on the US payments system – the fate of Dodd-Frank and the Durbin amendment still remains uncertain.

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