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The Durbin Debate – Survey Results and Infographic

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With the debate over the Durbin interchange fee amendment heating up, we figured it was high time that NerdWallet stepped into the fray to clear a few things up.

While we’ve covered some of the basic facts in the past, more Congressional debates have bred more press and even more confusion on top of it. So our first order of business was to boil down the facts in a way that is clear and easy to understand for anyone who doesn’t spend their days on Capitol Hill.  Hence, NerdWallet’s first infographic!

Plus, in order to satisfy our own curiosity we ran a survey to find out what this regulation will really mean for consumers and merchants. We wanted to know what our readers would do if stores started adding surcharges or charging minimums on credit and debit cards. Would they stay loyal to their local merchants and switch to cash? Or would they turn tail and find a store that doesn’t impose on their preferences?

Well it turns out that 70% of our respondents said that they “always” or “often” pay with a credit card for small transactions, and 58% carry three or more credit cards, so clearly they like their cards. And bad news for merchants’ bottom lines – if you break out the big-spender respondents who make more than $100k/yr, 71% of them said they were “not likely” to shop at a store that charges a 2% surcharge on card purchases, and 79% said that if they were faced with a $10 minimum, they would rather leave the store than be forced to meet the threshold. Ouch!

Our full survey results are here. And here’s the nutshell version, which you can also view full-size here:

What does the Durbin Amendment mean for you?

  • Following closely

    Surcharging is NOT ALLOWED under the Durbin amendment, only discounting for cash. And, it must be conspicuously posted that you are offering this or other discounts for debit so that deceptive business practices aren't perceived. Get your facts straight!

    • http://intensedebate.com/profiles/nerdwallet nerdwallet

      You're right, the final version of the bill specified that discounting is allowed for any type of payment (not just cash), as long as different discounts aren't offered for different debit/credit networks. However, this is just semantics. What is the difference between offering a discount on cash and a surcharge on debit/credit?

      • Following closely

        The difference is the price posted on any item does not go UP at the register, it goes down for discounting for using cash or debit. Durbin allows discounts for debit. Surcharging implies that the price will go up at the register by some percentage if a credit card is used (not debit). While it sounds conceptually similar, the behaviors at point of sale can vary greatly–we are ‘predictably irrational’ people. You are absolutely correct in saying selective discounting by network is not allowed.

        It should be interesting to see what happens as I’m not sure a small discount will change behavior. And, it would have to be very small to not eat into their profits. I think we’ll just see an increase in merchants’ profit without any consumer benefits.

        • nerdwallet

          Very true. From a psychological perspective you are absolutely right. Consumers will definitely react differently to seeing a lower price at the register than a higher price, though I'll be interested to see exactly what the impact of a 1-2% discount is. Since we're talking about 10c on a $10 bill, I for one will likely continue using my debit or credit card for the convenience.

          As you say, the discount will have to be very small to keep from eating into their profits, so there's also a strong likelihood that some merchants use this opportunity to raise all their prices a moderate amount, and then apply the discounts to these higher prices, which would eliminate any cash-payer benefit.