LETTER: Ricker’s owner got it wrong

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A recent IBJ opinion piece written by Jay Ricker, chairman of Ricker Oil Co. Inc., was short on fact and long on irony. Titled “How banks got their hands in your pocket” [April 10], the article erroneously blamed the banking industry, when actually it is certain retailers who profit at the expense of consumers.

The article focused on the effects of the Durbin Amendment, enacted in 2010, which put the Federal Reserve into the position of price-controlling the interchange fees that banks may charge merchants when customers use bank debit cards. These fees are necessary to pay for the infrastructure, technology and protections that make debit cards convenient and safe.

Retailers managed to influence passage of the Durbin Amendment by promising to pay back the savings they would reap to customers through lower prices. But those lower prices never happened; instead, retailers have pocketed $36 billion since Durbin’s inception, according to the Electronic Payments Coalition.

At least some of this extra cash could have gone to protecting retail customers with policies and procedures to keep data private.

Unfortunately retailers did not invest in sound practices, and consequently consumers have been repeatedly subjected to massive data breaches. If retailers had been as careful with data as is the banking industry, these breaches could have been prevented.

But why should retailers be careful? Every time there is a major retail data breach, the banking industry comes to the rescue. The sad reality is that banks must cover the fraud costs of data breaches, even though they are not to blame. And that’s not all. Banks also cover the fraud costs of ATM skimmers, for example, when a convenience store owner does not properly secure its ATM. Why worry, when banks will pay?

Clearly the Durbin Amendment was a mistake, and it was passed on a promise that never materialized. No wonder more than six in 10 consumers believe it should be repealed, according to data released by Morning Consult, along with a growing contingent on Capitol Hill eager to restore free-market economics

It is time for the Durbin Amendment to be repealed.


Amber R. Van Til, president and CEO
Indiana Bankers Association

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