The Durbin amendment, passed as part of the Dodd-Frank financial reform legislation in 2010, required the Federal Reserve to limit fees charged to retailers for debit card processing. The amendment was a last minute addition added by Illinois Senator Richard Durbin, after whom the amendment is named.
Through the bill U.S. Sen. Richard J. Durbin 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.
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.