Heartland Payment Systems, of Princeton, has been tracking the impact of the so-called Durbin Amendment, which caps bank fees charged to retailers for debit card transactions, since the law went into effect Oct. 1.
But New Jersey Retail Merchant Association president John Holub says the real impact won’t be seen until the end of the month, when retailers get their card processing statements.
Heartland reported earlier this week that New Jersey merchants will see an average of $308.58 saved on every $100,000 of card transactions under the new law. And while “it’s great and encouraging that Heartland is saying there is a definite dollar amount on average saving, but you have to look at this in the big picture, and all retailers are not created equal,” Holub said.
“Retailers that depend on larger transactions are going to save, but the retailer that is dependant on smaller transactions — I’d beg to differ that they’re saving any money; quite honestly, they’re probably losing a significant amount of money.”
The Durbin Amendment, sponsored by U.S. Sen. Richard Durbin, was a last-minute addition to the Dodd-Frank Act that aimed to improve consumer protection laws. The amendment institutes a 22 cents-per-transaction cap on interchange fees, which generally is an increase for small transactions, like coffee shop purchases, according to Holub.
Despite its unevenness, Holub scoffed at U.S. Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-N.Y.), who announced last week an effort to repeal the Durbin Amendment after Bank of America passed its loss in fees to the consumer through a debit card fee.
“If Congress wants to take away a measure that is supposed to save businesses and consumers money, they’re crazier than I thought they were,” Holub said. “That’s absolutely ludicrous.”
“It will merely be shifted to a more hidden fee that was the interchange,” Holub said. “Bankers will be able to increase those without any public scrutiny, whereas now the consumer is much more aware now of what bankers are doing. … Ultimately, the consumer will still be paying, they just won’t know how much they’re paying — and that’s not right. For anyone to argue otherwise simply doesn’t understand how this works.”