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Not even a month into its implementation, reports claim that the Durbin Amendment's $0.21 debit card fee cap is saving merchants millions of dollars.
But what if those savings are largely attributable to a limited number of businesses? Corporations with dozens of locations and millions in daily volume? Or small businesses that trade primarily in higher-priced services and goods?
With the way banks have responded to the new cap, this may end up becoming reality.
Effective as of October 1, the Durbin Amendment does the following:
While beneficial for a number of businesses, the new debit card fee cap has caused banks to seek alternatives means of revenue.
Bank of America, for example, will charge consumers a $5 monthly fee to make debit purchases. In an economy where young people rely significantly on plastic, this may curb impulse purchases.
It's often much simpler to walk away or find another merchant than to return with cash. And few want to pay the hefty fees to use an out-of-network ATM.
But for those that also accept credit cards, there may be a corresponding increase in such purchases. And in some cases, credit card transaction fees will be more costly than a pre-cap debit fee.
Merchants who deal in smaller purchases may also be paying higher transaction fees than before. In response to the cap, a number of card companies have announced plans to do away with the "small-ticket" interchange rate.
A $2 cup of coffee used to carry a $0.08 fee, but according to Forbes, that amount may soon be closer to the $0.21 cap.
We'll know more about how the impacts of the Durbin Amendment's debit card fee cap within the next year. In the mean time, you might want to consider ways to combat the above effects.