It’s been a long tough road to the Durbin Amendment, and its aftermath is here.
As part of the Dodd-Frank Act, which regulates what banks can now charge for all sorts of services, the Durbin Amendment specifically limits the amount that debit card issuers (which includes banks and credit unions), can charge merchants by at least 70 per cent of their current fees.
As a result, debit cards, once a profit machine, are now essentially not profitable.
The first sign of the times came when Chase stopped enrolling new members into its debit rewards program.
Now, it has pulled the plug on debit rewards altogether. In a letter to current Chase Ultimate Rewards cardholders it announced that effective July 19,2011, customers will no longer earn points on purchases made with a debit card. (Current points are still valid for redemption).
Interestingly, the announcement letter outwardly points the finger to the Durbin Amendment, stating that “as a result of this law, we will be changing our debit rewards program.”
While certainly a true claim, it might have been a bit more accurate to call a spade a spade and state that “as a result of the law, you are no longer making us any money when you use your debit card. Hence, we will end our debit rewards program.”