Contrary to assurances made during the debate running up to the Durbin amendment, new research from the Electronic Payments Coalition charges that merchants have not been passing debit interchange savings on to consumers.
The Durbin amendment, named for its chief sponsor, Sen. Richard Durbin (D-Ill.), capped debit card interchange for card issuers with over $10 billion in assets.
The Electronic Payments Coalition is an association of banks and credit unions that opposed it.
The EPC outlined its research in a report titled “Where's the Debit Discount?” and described how researchers visited national chain retailers in six U.S. cities, Washington D.C.; Boston; Little Rock, Ark.; Atlanta; Portland, Maine, and San Francisco.
The stores visited were from the Wal-Mart, Walgreens, 7-Eleven and Home Depot chains and each chain had lobbied in favor of the amendment.
Researchers visited stores in these cities four times, once in the week before regulations implementing the cap went into effect and three times after the Oct. 1 implementation date.
The shopping teams purchased the same basket of goods each time and averaged the prices in the three post-implementation visits with the prices they found in the one pre-implementation visit.
When the prices were compared, the research teams found that 12 of the 21 stores visited raised prices on the items after the interchange cap went into effect, by an average of 5.1%. Four of the 21 kept prices the same and only five of the 21 stores lowered prices, by 5.8%
In percentage terms, the EPS said that 76% of retailers visited either raised prices or kept them the same after they began to see additional income from the debit cap and only 23% lowered prices.
The bottom line, the association said, was that consumers paid 1.7% more, on average, for the same items in stores after the debit cap was put into effect than they did before.