DEFINITION of 'Durbin Amendment'

A part of the Dodd Frank Wall Street Reform and Consumer Protection Act that limits transaction fees imposed upon merchants by debit card issuers. The Durbin Amendment, named after U.S. Sen. Richard J. Durbin and introduced in 2010, proposed to restrict these interchange fees, which averaged 44 cents per transaction based on 1 to 3% of the transaction amount, to 12 cents per transaction for banks with $10 billion or more in assets.

BREAKING DOWN 'Durbin Amendment'

The amendment was based on the belief that interchange fees were not reasonable and proportional to card issuers' costs. When the bill became law in 2011, interchange fees were capped at 21 cents per transaction plus 5% of the transaction amount. Some banks implemented new fees and eliminated free services in an attempt to offset their interchange fee revenue losses.

RELATED TERMS
  1. Interchange Rate

    A fee charged by banks that covers the cost of handling and credit ...
  2. Per Transaction Fees

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  3. Authorization Only

    A type of sale transaction that creates a pending transaction ...
  4. Foreign Transaction Fee

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  5. Transaction Identifier

    A unique identifier assigned by a business to each transaction ...
  6. Authorization Date

    The month, day and year when a credit card transaction is approved ...
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