A Bill That Would Cut the Number of Banks Covered by Durbin Advances Out of Committee

A bill containing a provision that would raise the asset threshold for debit card issuers covered by the Durbin Amendment narrowly passed in a vote late Thursday by the House Financial Services Committee.

The committee voted 24-22 in favor of advancing the bill, called the Bank Resilience and Regulatory Improvement Act. The bill, which would raise $50 billion in assets from $10 billion the threshold at which the Durbin Amendment would apply, is sponsored by Financial Institutions and Monetary Policy subcommittee Chairman Rep. Andy Barr (R-Ky.). The legislation can now advance for a vote by the House of Representatives.

The vote comes as the Federal Reserve earlier this week closed the comment period on its proposal to adjust downward the maximum allowable interchange rate on debit card transactions. The Fed is proposing a maximum base amount for debit interchange of 14 cents per transaction, down from 21 cents. The fee is paid by acquirers, which typically pass the cost on to merchants with a markup. 

The merchant community, which opposes the bill, argues that raising the threshold for debit card issuers covered under the Durbin Amendment would exempt more than two-thirds of the banks currently covered by the 14-year-old regulation. With more issuers exempt, merchants would pay an additional $4 billion to $5 billion in debit card acceptance fees annually, according to the Merchants Payments Coalition. The increase in the fees would come as merchants grapple with the ongoing impact of inflation on their businesses, the MPC argues.

The closeness of the vote suggests many committee members have concerns about the impact of increasing debit card fees on merchants. “The vote shows that members of the committee are realizing that voting to increase inflation is not good policy or good politics,” says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores.

Kantor adds that the committee had discussed changes to the proposed asset cap for debit card issuers, and suspects that changes will be required before the bill can advance to a vote by the House.

“It’s unlikely that the bill will come to a vote unless changes are made,” Kantor says. “[Being] pro-inflation is not a good thing.”