New debit card fees and how the consumer got screwed, who did it and why

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So, who do we blame for the new fees on debit card use being imposed by some banks?  No doubt the inclination is to blame those greedy banks.  But wait a minute, in the past banks charged retailers a fee when a customer used a debit card for a purchase, about $.44. The retailer is relieved of handling and processing cash and receives its money electronically; quite efficient I would say.  The customer was also relieved of the need for cash.

Along comes the Dodd-Frank legislation to straighten out those bad banks and their practices. Included was the Sen. Durbin amendment that cut the debit card fees imposed by banks in half thereby cutting the revenue of the very organizations that the legislation and bail outs attempted to shore up and increase their capitalization.

In the process the large retailers such as Wal-Mart, Target, etc. receive a windfall because their debit card fees are cut in half (oh, did I mention those same organizations were reportedly behind the Durbin amendment in the first place?). Needles to say Durbin is slamming Bank of America for charging these fees. However, Bank of America repaid all the bailout money it received in late 2009 — the federal government made more than $4 billion off the arrangement. I wonder if this politician assumes the retailers will share their new found twenty-two cents per transaction with customers?

In the end we have a politician influenced by large retailers shifting costs from those retailers to banks who then shift the cost to consumers.  What if the banks simply absorbed this loss revenue?  Well in some cases it would help sustain the shaky ground they are already on. 

Now that we have another lesson in unintended consequences, what have we accomplished other than to make life tougher for middle and lower-income people (the ones most likely to shop at the big box retailers)?  Perhaps we have also learned another lesson about the short-sighted, easily influenced, dumb politicians we have employed.


  1. The law only applies to DEBIT Transactions, and doesn’t require the new ‘discounted’ fee to be pass to the merchant. Banks are now motovated to penalize ‘customers’ who use debit cards. The law doesn’t apply to ‘CREDIT CARDS’, THEREFORE , the banks are PROFIT MOTOVATED to move their ‘customers’ to use CREDIT CARDS (high interest rate/loans/FEES) and some kind of gimmick (rewards) to their customers.


    1. Merchants are the ones who pay the fee when a debit card is used just as they pay when a credit card is used. Therefor the merchant directly benefits from lower debit card fees. So who pockets the saving from lower fees? The merchants.


      Richard D Quinn Editor


    Kenneth Myron Bonnell

    Too many members of our congress
    Want always to spend more and not less.
    To them two plus two
    Equals twenty two;
    So one day we’ll all be broke I guess.


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