Home Depot Cuts Prices After Debit Card Swipe Fee Limit Takes Effect
After the Durbin Amendment to the Dodd-Frank Act limited the debit card swipe fee charged to retailers, Home Depot lowered prices for its customers.
At one store, financial regulation is helping customers in a demonstrable way.
Home Depot has lowered the prices of more than 3,000 products after regulators started enforcing a cap on debit card swipe fees in October, American Banker reports. Home Depot's decision lends credence tothe argument that retailers are likely to pass on the savings from the Durbin Amendent on to consumers.
"The money saved [by] Durbin goes into the pool of savings, lowers our overall operating costs, and allows us to reinvest in the business to lower prices," Dwaine Kimmet, Home Depot's treasurer and vice president of credit, said in an interview with American Banker. "We have absolutely lowered prices...[but] what I can't do is draw that direct correlation to Durbin."
Clarification: This article has been updated to include Kimmet's full quote that was published in American Banker and the number of items that Home Depot sells in its stores.
The Durbin Amendment, which went into effect on October 1, cuts the maximum debit card swipe fee charged to retailers in half. Before the bill, retailers were paying an average of 44 cents for every debit card transaction. Now, the Federal Reserve is enforcing a limit of 21 cents per transaction and 0.05 percent of the transaction, as well as an extra penny for card issuers with fraud-prevention standards, according toFox Business.
The banking industry has been charging new fees to try to make up for their lost revenue from the Durbin Amendment. Banks argue that the Durbin Amendment forces them to have no choice but to charge customers more fees, while retailers saythat higher debit card swipe fees in the past forced them to raise prices above their true value.