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

    An expense a business must pay each time it processes a customer’s ...
  3. Authorization Only

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

    Foreign transaction fees usually apply to credit card purchases ...
  5. Authorization Date

    The month, day and year when a credit card transaction is approved ...
  6. Bank Card Association

    An organization owned by financial institutions that licenses ...
Related Articles
  1. Personal Finance

    The Truth About Credit Card Swipe Fees

    Swipe fee legislation will only have a small effect on profit margins for merchants and little to no effect on prices.
  2. Investing

    Banks Push to Raise Fees Amid Debit Card War

    Banks and retailers are preparing for battle, this time over billions in debit-card fee revenue.
  3. Tech

    How Much Cheaper are Bitcoin Fees than Credit Card Fees?

    Bitcoin transaction fees are starting to rise as the network gets backlogged due to more usage, but are still much lower than typical credit card fees.
  4. Managing Wealth

    How Foreign Transaction Fees Work

    Using a credit card when you travel can be costly. Here's what you need to know about foreign transaction fees – plus tips on making purchases abroad.
  5. Personal Finance

    Small Business: Minimize Your Credit Card Fees

    Accepting credit cards is a must these days, but small business owners can take steps to minimize profit-eating credit card fees.
  6. Investing

    It's JPMorgan vs. Wal-Mart in Debit Card Fee War

    Banks and retailers are fighting over swipe-card fees.
  7. Tech

    Bitcoin Transactions Vs. Credit Card Transactions

    We provide an overview of the differences between bitcoin and credit card transactions, and the advantages of using one over the other.
  8. Small Business

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  9. Personal Finance

    5 Bank Fees You May Not Know About

    Banking regulations have recently changed and fees are following suit.
  10. Personal Finance

    Forget Your Bank Account - Use Your Credit Card

    What if you used your credit card as a bank account? Believe it or not, this strange strategy could actually work.
RELATED FAQS
  1. What are some examples of sneaky credit card charges to watch out for?

    Review the most common sneaky credit card charges and learn how to protect yourself from unwanted charges from creditors ... Read Answer >>
  2. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  3. Why do credit card companies calculate revenue splits in terms of basis points?

    Discover how revenue splitting works and how credit card companies are able to utilize basis points in revenue splits to ... Read Answer >>
Trading Center