The Durbin Amendment Goes Live October 2011: Are You Ready?

Aug 16, 2011

The Durbin Amendment Goes Live October 2011: Are You Ready?

Javelin Recommendations Enable Financial Institutions, Other Stakeholders to Address and Respond to Durbin-Based Regulations

San Francisco, CA, August 16, 2011 –– Javelin Strategy & Research’s latest research report — “The Durbin Amendment: Planning for $ix Billion in Change to Banks, Networks, Merchants and Consumers” — addresses the mostly final Durbin-based regulations affecting debit interchange rates, network exclusivity, routing, and interim fraud provisions that the Federal Reserve announced this past June. Based on final Durbin rulings, Javelin forecasts that revenue at affected institutions will decline an estimated total of $6.6 billion per year. As financial institutions (FIs) consider the magnitude of debit card revenue shortfall and the loss of fees that traditionally subsidized free checking, many institutions are re-evaluating DDA economics.

“Seven of the top 10 banks have recently announced plans to eliminate free checking,” notes Beth Robertson, Director of Payments Research at Javelin. “Durbin is forcing a shift in how FIs structure DDA offerings, but institutions have an opportunity to repackage value-added services to their most profitable consumer segments as a way to recover revenues.”

The Durbin Amendment will also foster processing and business model changes for merchants, acquirers, issuers, and networks. For example, despite offering demonstrably better fraud protection rates, PIN networks’ share will be unlikely to supplant signature as networks vie to maintain critical position, including new incentives to provide contact and contactless chip authentication alternatives.  The interim fraud provisions contained in the current Durbin guidance should be carefully scrutinized to encourage constructive innovation based on more than historical fraud management requirements.

“The Durbin Amendment will have a domino effect of sorts on everyone, although Durbin will impact stakeholders in very different ways.” said James Van Dyke, Javelin’s President and Founder. “Our report will not only help stakeholders understand the impact of Durbin on their business models and their relationships with consumers, but will also help them prepare for the upcoming changes.”

Javelin’s report evaluates each component of the Durbin regulations and reviews the impact this guidance will have on FIs, merchants, issuers, acquirers, regulators, and consumers. Based on extensive analysis of key documents and data from the Federal Reserve, an in-depth review of the consumer-facing protective features of top issuers, and surveys conducted with nearly 5,000 consumers, the report provides key recommendations on how all stakeholders should respond and react to Durbin and predicts whether Durbin will endure.

Selected Key Report Findings – The Durbin Amendment

  • How the Durbin Amendment will specifically affect FIs, networks, issuers, acquirers, merchants, consumers, and regulators.
  • The network that has the most to lose due to Durbin – and those that will benefit.
  • Why the Durbin Amendment may – or may not – be overturned in 2012.

About Javelin Strategy & Research

Javelin Strategy & Research is the leading provider of quantitative and qualitative research focused on the global financial services industry. Our extensive quantitative data and deep analyst experience enable us to forecast the direction of the financial services market and make recommendations that empower you and your business to succeed.


For more information about this or other Javelin reports, please contact Crystal Mendoza at (925) 225-9100 ext. 35 or or visit

To arrange an interview with a research analyst and/or view available research (available to qualified members of the media), please contact Crystal Mendoza at (925) 225-9100 ext. 35 or