Durbin Amendment and How it Impacts Your Business

What Is The Durbin Amendment? In July of 2010 President Obama signed into legislation The Dodd-Frank Wall Street Reform and Consumer Protection Act. Included in this Act is the Durbin Amendment named after Senator Dick Durbin (R-IL) who authored this piece of legislation. Prior to the Durbin Amendment, Visa and Mastercard had been free to set debit card interchange fees as they wished. Senator Durbin felt that these fees were unfair to merchants and consumers. His Amendment directs the Federal Reserve to lower debit card interchange fees to a more reasonable amount. Prior to this legislation debit card interchange fees were set at around 1% to 5% of the sale amount. The Durbin Amendment has reduced these fees by a considerable margin. How does it impact my business? Debit cards account for over 50% of all Visa and Mastercard transactions processed by merchants across the country. If your business accepts Visa and Mastercard, you could see a drastic reduction in fees. However, your merchant account must be setup properly to receive the benefits. Do Credit Card Processors and Merchant Service companies have to pass along the reduced fees to merchants? No. If your business is not setup correctly, you will not see the savings. The legislation does not require that Processors pass on the reduced  interchange fees. When does the Durbin Amendment go into effect? Oct 1st, 2011

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