A Regulatory & Legislative Advisory for Compliance Professionals
October 26, 2012
Inside . . .
RETAILERS NOT USING INTERCHANGE SAVINGS
TO LOWER CONSUMER PRICES
2 Proposed Change to
Credit Card Rule
2 ABA Comments on
One year after the Durbin amendment took effect retailers haven’t passed on to
customers the substantial savings they’ve reaped from lower interchange fees,
according to a Electronic Payments Coalition study released on September 28.
“Despite retailer promises of lower prices, consumers paid on average 1.5 percent
more after the implementation of the Durbin amendment. These higher prices for
consumers come as retailers save billions and debit card issuers are forced to make
up for lost revenue,” said the EPC, of which ABA is a member.
3 Changes Needed to
3 Revision Needed to
The study compared identical baskets of goods – before and one year after the Durbin
amendment’s Oct. 1, 2011, implementation – during 36 shopping trips at 18 retail
locations of four major national franchises in five diverse cities. The results show that
67 percent of the retailers either raised prices or kept them the same. “Consumers are
paying more for traditional banking products and services [as a result of the Durbin
amendment] and not even getting any reduction at the register to help ease the pain,”
the EPC said. Read more. Read the report.
3 ABA Concerns on
4 Trades Address
Harmful Provisions of
EXPECT MORE INTERVENTION IN INTERCHANGE ISSUE
5 Other CFPB News
It would be a "serious mistake" to conclude that the July interchange fee litigation
settlement between the card industry and retailers will put to rest congressional
involvement in the issues surrounding payments system, Sen. Richard Durbin (D-IL)
said in a September 25 letter to ABA’s Frank Keating.
Bank Secrecy Act
7 BSA/AML News
Durbin was responding to Keating's September 20 letter urging Congress to end the
debate over interchange fees and financial support of the payments system by
rejecting calls from some retail groups to impose even more government price controls
that hurt consumers. Keating noted that the Retail Industry Leaders Association said
the settlement, which provides more than $7.2 billion in payments to about 7 million
merchants, was not enough, and it implored Congress to impose further price controls.
8 Elevated Cyber-Threat to Banks
8 Safe Use of IT is Top
9 ABA Tips to Small
Durbin, in essence, agreed with the retailers. "If this proposed settlement is finalized,
millions ... whose interests were not represented in the secret settlement negotiations
would be negatively impacted," he said. "Adoption of this proposed settlement would
almost certainly guarantee that future congressional intervention will be necessary ... ."
Durbin added – without citing any evidence – that small banks and credit unions "have
thrived" since his amendment took effect. Many consumers also have received
discounts for buying products with their debit cards, and have benefited from