In spite of the much-heralded Durbin Amendment, which took effect a year ago, on October 1, 2011, and was supposed to lower prices for consumers by lowering interchange fees on debit transactions for retailers, consumers are paying an average of 1.5 percent more for their purchases than they were one year ago.
That’s according the Electronic Payments Coalition, who claims retailers aren’t playing fair with consumers, keeping the $8 billion that Congress gave them and not lowering prices to reflect the lower interchange fees they now pay on all debit transactions.
In a press release, Electronic Payments Coalition spokeswoman Trish Wexler says, “Let’s just call a spade a spade – this was a political handout to big box retailers, who are now scrambling to make excuses for why they couldn’t pass these savings along to customers.”
Research Field Trips Show No Savings
Price analysis was conducted by the Electronic Payments Coalition, which also launched a consumer-advocacy website, www.WheresMyDebitDiscount.com, further explaining the research methods, the impact of the Durbin Amendment, and what consumers can do to find relief from rising prices.
The coalition made 36 shopping expeditions to 18 big-box retailers across the country, making two stops at each store – one just before the Durbin Amendment went into effect, and one in the last week of September 2012, a year later. They purchased the same items and compared the cost – here’s what they found:
- Post-Durbin, shoppers paid an average of $2.22 more for the exact same items at Home Depot in Atlanta, Georgia.
- Home Depot showed more price increases during the past year than any other chain store visited.
- The same items cost an average of 80 cents more at Wal-Mart in Portland, Maine.
Washington, D.C. 7-11 stores charged an average of $1 more for the same products this year as compared to last year.
Research found that at 67 percent of the retailers visited, prices were either the same or higher than last year, with no savings found from the Durbin Amendment.
“With a wink and a nod, giant retailers promised to lower prices for their customers if Congress passed the Durbin amendment. One year after implementation, retailers have taken home $8 billion while many of their customers pay more at the register,” Wexler concluded.
Replacing Credit Cards with Debit Cards Can Save – if Consumers are Careful
With no retail relief from Durbin, consumers might consider swapping out their debit cards for rewards credit cards, which give at least one percent back on all purchases, and up to five percent back in rotating categories all year long.
If the average family spends just $500 at the grocery store each month and pays using their cash back rewards card, even at the lowest reward threshold – one percent back on all purchases – they’ll get $60 back at the end of the year. Add in extra percentages back from rotating categories, shopping at credit card rewards malls online, and possible sign-on bonuses, and using a rewards credit card can make up for those increased retailer prices.
There’s one thing to remember, though: cardholders must pay their balance in full each month by the payment due date, or interest charges can easily cancel out any rewards.