The debit fee swipe card war is not over yet. The anti-regulatory political climate has given banks new life in their war on the Durbin Amendment. And that has the industry's lobbyists pressing hard in Washington to either scuttle, defund or somehow crimp the amendment, which threatens the $12 billion in swipe fees generated in 2009. 

We're even seeing banks take the fight to the people, running ads suggesting Washington lawmakers want to "take away your debit card." At least one bank has sued to block the Durbin Amendment. The industry may be closing in on a political victory, as the Senate is close to finalizing a bill that would delay the amendment's implementation. 

Recall the Durbin Amendment, which passed into law as part of Dodd-Frank, required the Federal Reserve Board to reduce swipe fees on debit cards to a "reasonable and proportional" cost of each transaction. The Fed subsequently came out with new rules that would cap interchange fees at about 12 cents per swipe vs. nearly 45 cents now. 

We're seeing some interesting arguments and tactics emerge. One relatively new argument revolves around the economics of it all, which may be effective in the post-recession malaise. In this view, the new fee structure will make debit cards less profitable for banks, so they will have to hike fees in other areas and encourage the use of credit cards instead of debit cards. One Morgan Stanley analyst argues this reduced use of debit cards and various higher fees will lead to less consumer spending, which will hurt the economy. The analyst now recommends credit card companies  because he thinks they will benefit from the war on debit card interchange fees. 

Another anti-Durbin Amendment statement comes from JPMorgan, which has floated an idea to cap transaction sizes. The banks is apparently considering limiting debit card transactions to either $50 or $100. The idea is that new swipe fees, which are intended to compensate banks for the costs of fraud, impose a limit on transactions. If the compensation via the interchange fee is lower, then the transaction size must be lower to protect the bank. 

All of this amounts to a test of just how much consumers love their debit cards. Do they feel personally harmed by the prospect of changes to debit card use? So much so that they will rally around the banks? As the campaign against the Durbin Amendment steps up, we may soon find out. - Jim