How Durbin Amendment affects consumers - Essay Example

Slide The paper addresses the topic of Durbin Amendment, and its implications on consumers. Slide 2 The organization of the paper is a follows: first part presents a characterization of the Durbin Amendment, part two discusses the impact of this amendment on consumers, and the paper finishes with a conclusion.Slide 3The Durbin Amendment’s main feature is that it introduces a fixed cap (superior limit) on the amount banks can charge for a debit transaction i.e. cap of 21 cents per swipe, plus 0.

05 percent of the transaction. Moreover, it is the possibility of an additional cent charged for banks, which are complying with fraud prevention procedures.Slide 4In what concerns the implications of this amendment on consumers, these are various. Firstly, consumers will pay higher fees because banks will want to increase the other fees and reduce services in order to offset the decline in their revenues.Secondly, there would be a lack of security innovation due to the low incentive of card networks to improve the security practices because their revenues would decrease following the lower fees this amendment supposes.

Finally, consumers would prefer other forms of payment e.g. cash payment or using credit cards instead of debit cards in order to not have to pay higher fees charged by the banking system.Slide 5In conclusion, the Durbin Amendment has the intention of lowering the burden of higher payments for services from the banks, but it does not help the consumers, instead it manages only to increase this burden.Slide 6Thank you for your attention.