The Durbin Amendment to the Dodd-Frank Act was designed to help protect consumers, but may end up resulting in higher costs for making credit card purchases.
The Federal Reserve Board recently capped the amount payment processing networks could charge businesses for accepting debit transactions, but now these networks are likely to boost the fees for credit purchases to make up the lost revenue, according to a report from the consulting firm Ideal Cost. As a result, consumers may face more credit card debt as a result of merchants charging more to accept credit purchases.
"The Durbin Amendment touted itself as the end-all of all unreasonable merchant fees," said Robert Livingstone, president and founder of Ideal Cost. "Whether it was poorly drafted to purposely support only certain industries or miswritten completely by accident, it will result in harming American merchants. In this economic climate merchants are burdened with rising costs in almost every other aspect of their business. The last thing that they need is an unsubstantiated rate increase."
Higher prices may make it more difficult for consumers to reduce debt, and as such, it's important for Americans to keep an eye on their spending to ensure they're being responsible.