Banks lost millions of dollars in interchange fees during the fourth quarter of 2011 due to changes made by the Durbin Amendment, according to research from Charlottesville, Va.-based SNL Financial.
The Durbin amendment, part of the Dodd-Frank financial reform bill, caps the amount banks can charge retailers for swiping their debit cards. The cap limits the fee to an average of 24 cents per transaction instead of the previous industry average of 44 cents. The new limit took effect in the summer of 2011.
According to SNL, the Durbin limits had a noticeable impact on some banks, while other large financial institutions like American Express and Citigroup were left relatively unscathed because they either do not issue debit cards or debit interchange revenue is not a meaningful source of income for the companies.
Both those financial institutions saw their interchange fees increase in the fourth quarter 2011. But many other banks did not report similar results.
JPMorgan Chase interchange fees totaled $1.12 billion in the fourth quarter of 2011, down from $1.38 billion in the third quarter. Bank of America saw its debit card revenue reduced by $430 million in the fourth quarter, and Wells Fargo posted $365 million less in pretax debit interchange income than it would have with the pre-Durbin interchange pricing according to the company's latest 10-K.