Independent Banker - April 2022 - 41

items are nine times more likely to
have encountered an increase in
interchange cost than a decline.
Unintended consequences
A provision of the Durbin
Amendment that transferred routing
decisions from banks and consumers
to merchants illustrates the policy's
unintended consequences.
Because large merchants have
direct connections to the payments
networks, unlike smaller retailers,
they can and do negotiate with the
debit networks for more favorable
rates and fees. Industry experts
estimate that a threshold of about
$3 billion in annual card sales
is required to get a seat at the
negotiating table-a process that is
neither transparent nor competitive.
Allowing merchants to control
debit routing at the point of
sale dilutes issuer assurances to
customers that their bank protects
access to their account. Suddenly,
banks have little or no control over
the routing they have carefully
chosen based on their organization's
and customers' needs.
Further, the practice increases
community bank costs by raising fees
to access debit card networks while
artifi cially lowering interchange rates.
If additional transactions are
included in these rules-such as
online purchases-community banks
will again be disadvantaged while
" big box " and large e-commerce
merchants benefi t.
ICBA at the forefront of
payments advocacy
ICBA continues to push back against
expansion of the Durbin Amendment.
This winter, we partnered with
several other industry trade
associations in a joint letter to the
Federal Reserve to make the case that
the Durbin Amendment has failed
What to say to
policymakers
about the Durban
Amendment
As policymakers
consider expanding the
Durbin Amendment,
community banks must
be heard. Here are facts
you can share with your
members of Congress to
illustrate the impact of
this harmful policy.
fConsumers are
harmed by the Durbin
Amendment by paying
higher prices and
transferring wealth to
" big box " merchants.
fWhile the Durbin
Amendment
" exempted " small
institutions, Federal
Reserve data clearly
shows it has harmed
community banks.
fCard issuers
eliminated debit
rewards for consumers
due to the negative
financial impact of
interchange fee caps.
fImposing these
policies on credit cards
would undermine
competition and
innovation to
the detriment of
consumers who
use these payment
services.
Find more advocacy
tools at icba.org/
advocacy
to achieve its intended goals, and
that the Fed should recommend its
speedy appeal.
This is in addition to the
association's own advocacy,
including comment letters on Fed
proposals strongly opposing any
additional substantive revisions to
Reg II, particularly those that could
threaten the competitiveness or
stability of community banks.
Community banker voices
are powerful
These well-researched briefs make
a convincing case for why the
Durbin Amendment is harmful to
consumers and community banks-
but more advocacy is needed to
win this fi ght. Community bankers
need to reach out to policymakers,
legislators and their staff and give
this issue a name and a face (see
boxout, left).
While " big box " merchants
continue pressing to expand
interchange price controls to
boost their profi ts, policymakers
must be reminded that the Durbin
Amendment has been a costly and
harmful policy for community banks
and the consumers they serve.
Don't let " big box " stores
continue to pick the pockets of
consumers and community banks.
Write a letter, pick up the phone-
or better yet-set an appointment
for an in-person visit with your
members of Congress and their key
staff members.
Your voice as a community banker
matters-and you're the only one
who can raise it. 
Deborah Matthews Phillips
(deborah.phillips@icba.org) is
senior vice president of payments
and technology policy for ICBA
independentbanker.org Q 39
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Independent Banker - April 2022

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