I recently had the opportunity to see Senator Christopher Dodd speak at ETA, and he explained how the amendment was pushed through at the last minute - nobody really paid attention to it, and it just got passed along with everything else.
The Durbin Amendment has some major ramifications to the payment processing industry. Specifically:
- A cap of 7 to 12 cents on most debit card swipe fees, a decline of about 80% from present levels
- The introduction of competition, by giving merchants a choice as to which debit network they process transactions over. For example, present arrangements effectively force merchants to process many Visa transactions over the STAR network, even if competitors like PULSE and NYCE offer to conduct the same transaction at a lower processing price.
- Merchants can impose a $10 minimum on credit card transactions (this number can be adjusted by the Fed as they see fit). Previously, Visa and MasterCard banned this practice in their merchant agreements.
- Merchants are allowed to give discounts at the register to those who pay with cash or debit cards. Previously, Visa and MasterCard banned this practice in their merchant agreements.
A great article about this amendment can be found here (and some of the information in this blog was taken from this article): http://www.nerdwallet.com/blog/2011/durbin-amendment-explained/