One of the many puzzling aspects of the Durbin Amendment was the myopic expectation by some legislators that this regulation would somehow benefit consumers. As we now know, Regulation II has contributed to the dismantling of the retail financial services business model in the United States that supported free checking account services and has offered consumers little direct respite at the POS.
Last year, Congress set price controls on the cost retailers pay to accept debit cards through the Durbin amendment. Congress justified the legislation, in part, because of retailers’ claims that consumers would benefit in the form of lower prices.
However, one has to remember that deep discounting has become a way of life for many retailers across the United States. It is reasonable to assume that at least some of the capital saved through lower interchange fees is being funneled into these programs, but retailers are not going to talk about that to consumers. Hence, the CSI effect that consumers might be looking for, as in “show me the facts”, is not going to happen.
