IIt’s fair to say that American’s are relieved to see the Durbin Amendment pass, which cuts down the fees that banks charge for debit card transactions.  What does that mean for merchants?  How do you know   whether you’re paying too much for your debit swipes?  Some merchant service providers plan to eliminate debit charges all together for qualified applicants.

Last year Congress passed and President Obama signed a legislation to reform the financial industry. The bill, which was highly contested and passed along party lines, contained one last revision from Senator Dick Durbin of Illinois. The Durbin Amendment required the Federal Reserve to restrict swipe fees at a reasonable amount. The Fed would determine the true cost of fraud prevention, and minimize interchange fees appropriately. The Durbin Amendment specified that institutions with less than $10 billion in assets would be exempt from the cap.

The law is set to pass in October of this year.  The industry debit card fee drops from an average of 44 cents per transaction to just 21 cents per transaction.  It’s difficult to tell exactly how soon merchants will reap the benefits, and how many of them are paying attention.

The Durbin Amendment might require banks to lower their debit card processing fees charged to merchants, but merchant account providers aren’t obligated to do the same.  Therefore, the law has a loophole that almost defeats the intended purpose.  How can merchants take advantage of the Amendment’s benefits if they’re never offered?  October is probably a good month to do a routine checkup on your monthly statement.

Banks will lean toward distributing PIN card products rather than signature debit cards and rewards debit cards, which minimizes the amount of risk banks take on.  However, merchants will have to have a PIN pad machine available in order to manage the increase in demand.

What to do…

Start by familiarizing yourself with the new law and what it means for your business.

A lot of merchant providers offer a bucket system to simplify the process, but the new changes in the fall may not affect the system you have.  A simple solution like the Interchange Plus program provides an attractive low rate that can minimize your monthly charges.

Shop around:  It’s difficult to tell whether you’re saving money if you don’t know what other merchant service providers are offering.  A few minutes of research could save you hundreds of dollars each month.  <-->

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