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Economic Brief

December 2015, No. 15-12

Did the Durbin Amendment Reduce Merchant Costs? Evidence from Survey Results

Renee Haltom and Zhu Wang

Debit cards facilitate nearly 50 billion transactions annually — so the fees that debit card networks and issuers assess on each transaction are of great interest to merchants, consumers, and, more recently, regulators. In 2010, the so-called Durbin Amendment of the Dodd-Frank Act aimed to lower merchants' costs of accepting debit cards by capping debit interchange fees. New survey results suggest that the regulation has had limited and unequal effects on merchants. This Economic Brief discusses the causes of these findings as well as the implications of the regulation for end users.

Additional Resources

Kay, Benjamin S., Mark D. Manuszak, and Cindy M. Vojtech, "Bank Profitability and Debit Card Interchange Regulation: Bank Responses to the Durbin Amendment," Federal Reserve Board of Governors Finance and Economics Discussion Series No. 2014-77, August 2014.

Rochet, Jean-Charles, and Jean Tirole, "Must-Take Cards: Merchant Discounts and Avoided Costs," Journal of the European Economic Association, June 2011, vol. 9, no. 3, pp. 462-495. (A previous version is available online.)

Wang, Zhu, "Debit Card Interchange Fee Regulation: Some Assessments and Considerations," Federal Reserve Bank of Richmond Economic Quarterly, Third Quarter 2012, vol. 98, no. 3, pp. 159-182.

Wang, Zhu, "Price Cap Regulation in a Two-sided Market: Intended and Unintended Consequences," Federal Reserve Bank of Richmond Working Paper No. 13-06R, Revised October 2015.

Wang, Zhu, Scarlett Schwartz, and Neil Mitchell, "The Impact of the Durbin Amendment on Merchants: A Survey Study," Federal Reserve Bank of Richmond Economic Quarterly, Third Quarter 2014, vol. 100, no. 3, pp. 183-208. 

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