Redbox raising DVD rental fees by 20 percent

By on October 28, 2011, 12:00 PM

Daily DVD rentals from Redbox will soon cost users 20 percent more per day. Starting Monday, the price for a single day DVD rental will be increased to $1.20, up from the even dollar that they have been at for the last eight years.

Prices for Blu-ray discs and video games at the self-service vending kiosks will remain at $1.50 per day and $2 per day, respectively. The DVD rental fee increase is said to cover an increase in operating expenses which isn’t an uncommon excuse. But in the case of Redbox, there is a bit of truth behind the statement.

A new law that went into effect this month called the Durbin Amendment has, among other things, increased the fee that merchants are required to pay credit card companies per transaction. According to Wedbush analyst Michael Pachter, this fee has increased from around 6 cents per transaction to around 23 cents per debit card swipe. While 17 cents doesn’t sound like much, it adds up very quickly when you are dealing with millions of transactions.

"We remain committed to providing Redbox consumers access to the latest movies at an incredible value," said Coinstar CEO Paul Davis. "This marks the first price increase for a Redbox standard definition DVD rental in eight years."

It remains to be seen if Redbox will suffer the type of backlash that Netflix went through when they increased the price of streaming plus DVD-by-mail services by nearly $6 per month over the summer. That move resulted in the loss of 800,000 subscribers. If nothing else, at least Redbox has a valid reason for the price hike.

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