WASHINGTON – A new Federal Reserve Bank of Richmond study reveals the impact of regulations on debit card swipe fees contained in the Durbin Amendment to the Dodd-Frank Act. The study showed 90% of merchants had not seen any savings, did not know or saw their costs actually rise—the opposite effect Congress envisioned when it passed debit reform five years ago.

“The Richmond Fed report should be a wake-up call for the U.S. Federal Reserve,” said Lyle Beckwith, senior vice president of government relations at NACS. “Ninety percent of merchants having their fees stay the same or go up makes no sense when Congress recognized that the price-fixed fees were too high already.”

Under the Durbin Amendment, Congress required the U.S. Federal Reserve to impose rules to make the market more competitive and exorbitant fees more reasonable. However, the Fed bowed to heavy pressure from the big banks and introduced only half-measures. For instance, the Fed doubled its own original estimate of a fair fee on a debit transaction and for some small transactions, the fees increased.

According to the Merchants Payments Coalition (MPC), of which NACS is a founding member, figures the banks themselves report to the Fed, show that they still earn a 500% profit on debit fees, which they charge merchants every time a customer swipes a debit card to pay for something. These fees, set by MasterCard and Visa for their member banks so the banks don’t have to compete, raise prices for consumers, hurt small retailers and slow the entire economy.

The Fed’s rules have failed to create the result Congress intended: A fair, competitive market that looks like the rest of our free-market system.