By Christopher Maag
Just weeks after a law that limits debit card swipe fees fully took effect, a bipartisan effort in Congress is moving to repeal it. Representatives Bill Owens (D-N.Y.) and Jason Chaffetz (R-Utah) announced Wednesday that they are introducing a bill to overturn the Durbin Amendment, which has become the centre of an ongoing controversy over rising bank fees.
“The Durbin Amendment is an affront to consumers and the banking industry,” Chaffetz said in a press release. “These legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue.”
The amendment, passed last summer as part of the Dodd-Frank financial reform act, limits debit card swipe fees to be “reasonable and proportional to the actual cost” of processing each debit card transaction. The average cost of each swipe had risen to 44 cents, according to the Federal Reserve, which wrote rules under the new law capping the fees at about 22 cents per swipe.
In response, banks said they would have to increase other fees to make up for the lost revenue. Bank of America blamed its decision to start charging its customers $5 a month to use their debit cards for purchases partly on the revenue it lost due to Durbin.
“This unprecedented transfer in costs from retailers to consumers—the result of government price fixing—has resulted in consumers paying higher fees for basic bank services,” Kenneth Clayton, chief counsel for the American Bankers Association, said in a statement supporting the new repeal attempt.
The law’s defenders counter that increasing fees have more to do with banks’ greed than the Durbin amendment.
“After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers,” said the law’s author, Sen. Dick Durbin (D – Ill.).
This story originally appeared on Credit.com
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