Durbin Rule Costs Banks Billions: Consumers Paying Price?
There's also little doubt that the Durbin amendment has changed the way banks market debit and credit cards to consumers, as well as the way they charge fees linked to those cards.
Citing "loopholes within the legislation," Card Hub says that banks are already driving down the impact of interchange fee revisions.
"It is unlikely that major banks will allow their revenue to decrease significantly, so we predict that they will make up for lost revenue by increasing monthly fees and minimum balance requirements, and making debit card reward programs less appealing," says the Card Hub study.
The report notes, for example, that prepaid cards are exempt from the rule changes, and consequently banks are pushing consumers into prepaid card deals rather than checking accounts. And, as Papadimitriou notes, banks are killing off wildly popular rewards cards because they're not making enough money off fees associated with those cards.
With the smoke finally clearing from the Durbin amendment fallout, it's becoming apparent that, when it comes to consumer financial protection, Uncle Sam may give bank customers a break or two on the one hand while it takes away some benefits with the other.