Naturally, in Washington, D.C., street parking has become partisan. That’s what happened when a company that processes parking payments for the city raised its transaction fees—and blamed a new regulation for the price increase. Companies say regulations force cost increases all the time without much notice, but this isn’t about just any piece of legislation. It’s about the part of Dodd-Frank financial reform that capped how much banks charge to process debit-card transactions. The so-called Durbin Amendment was the focus of a nasty battle that pit big retailers against big banks—with questions whether consumers would see any benefit regardless of the outcome. A year after the law began taking effect, both sides seized on any sign of its impact to further their cause.
The parking controversy started two weeks ago, when Parkmobile said it was raising the fee it charged customers to pay with plastic by 13¢. “Transaction fees in D.C. will increase from $0.32 to $0.45 due to increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment,” the company said. The hike was quickly dubbed a Dodd-Frank “parking tax,” and eventually Senator Durbin got into the fray, firing off a letter that said Parkmobile’s statement was “misleading” because his amendment actually capped how much banks can charge. Eventually, Parkmobile backed down, e-mailing customers again to say that their initial release was “overly simplistic.”
So what happened? The Durbin Amendment did cap the maximum amount Visa and Mastercard could charge merchants for processing debit-card transactions, so the payment companies ended the discounts they had given merchants on smaller transactions. That tripled Parkmobile’s fees, the company explained, adding that the hike was how card networks and issuing banks “responded” to the Durbin Amendment, rather than a mandated, direct result of the law as it earlier said.
As we’ve written, the debates over swipe fees are far from over, so the impact of the rule could still translate to big dollar changes. There’s been only anecdotal evidence so far about what the net effect is on consumers. Over the summer, Home Depot told American Banker that it had trimmed prices on more than 3,000 items since the Durbin Amendment took effect in October 2011, but the cuts “cannot be directly attributed to the regulations,” the paper explained.
It took a formal Federal Reserve report to figure out where to set the initial cap for the Durbin Amendment, but there’s no equivalent nonpartisan research out on the effects. To quote what Kevin Drum, a blogger at Mother Jones, wrote about a different swipe fee battle, “I expect many doctoral dissertations on this subject in the years to come.” PhD candidates—have at it.