That won't happen. The credit card cartel will ensure the transaction fees stay in the 1.5% to 3% range because if they don't they can't meet quarterly profits. Regardless of the technical infrastructure the companies will be fighting an up-hill battle against hundres of years of banking history. Also, why do you think the credit card companies are quickly investing in these startups? A: To ensure control.
Did you actually read dodd frank? Because you are completely wrong about what it says. The Durbin amendment to Dodd Frank is a reduction of interchange fees for debit cards issued by large banks. It impacts ~50% of debit cards, which are about ~30% of total cards, so 15% of cards in total. And it reduces those fees by 60-80% (so from around 1.5% to < 1%). As a result, it is a very minimal financial hit to the banks who ultimately receive the interchange revenues.
Furthermore, Durbin amendment will not survive. I will bet anyone on this - the banks are running a very aggressive FUD campaign which I suspect will work. It sucks, but that's what is what's happening.
Also, keep in mind that the fees being legislated by Dodd Frnak are the interchange fees that are actually the most significant expense for payments companies such as square, so it could improve their profitability a lot. It could also allow them to lower their fees and still make money, which coud increase adoption.
Durbin amendment, if it survives, is a positive for Square and every other payments company. It is a negative for the banks that ISSUE debit cards (basically Chase, Citi and BofA).