On May 24, 2017, Rep. Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, agreed to remove the repeal of the Durbin Amendment from the second discussion draft of the Financial CHOICE Act (“CHOICE 2.0”). The Durbin Amendment, an amendment to the Electronic Fund Transfer Act added by section 1075 of the Dodd-Frank Act, requires the Federal Reserve Board to adopt regulations to cap interchange fees that banks with $10 billion or more in assets may receive from payment card networks in debit card transactions. The Durbin Amendment, and the Federal Reserve Board’s regulations, also prohibit the issuance of debit cards that restrict the processing of electronic debit transactions to less than two unaffiliated networks, and contractual or other restrictions on merchants’ routing of electronic debt transactions over any payment card network that can process the transactions.
The proposed repeal of the Durbin Amendment has divided Republican lawmakers and has been fiercely debated in the House of Representatives (the “House”). In a written statement, Congressman Hensarling stated that he would not “let this one provision hinder passage of an important priority bill that will end bank bailouts and help renew healthy economic growth for all Americans.” The removal of this provision from CHOICE 2.0 is a victory for retailers, who vigorously pushed for adoption of the Durbin Amendment and benefit from the Durbin Amendment’s cap on the debit card interchange fees merchants can be charged. Banks, which receive the interchange fees charged by payment card networks, have fought against the Durbin Amendment, arguing that it is an example of unnecessary government interference in the free market. The Consumer Bankers Association reported in a letter to Congressman Hensarling that “the Durbin Amendment has resulted in a $42 billion windfall for merchants and little if any savings for consumers.”
Although dropping the repeal of the Durbin Amendment may make CHOICE 2.0 more likely to pass the House, prospects for the bill’s passage in the Senate are dim. It has been reported that Republicans in the Senate are currently drafting their own comprehensive regulatory reform bill.