The so-called Durbin Amendment was originally set to have taken effect on July 21st, 2011. This component of the Dodd-Frank Wall Street Reform and Consumer Protection Act was to have set a proposed maximum debit card interchange fee of 12 cents for both pin debit and signature card debit transactions, only for banks that had $10 billion or more in assets. This worked out to be a 70% reduction in the average debit card fee ($.44) according to the Fed.
The Final rules issued raised the maximum Interchange fee to $.21 per transaction, with an additional allowance of 5 basis points of transaction value to account for fraud costs. And included an interim proposed rule to allow banks to charge an additional $.01 cent per transaction if they meet certain fraud prevention standards established by the Fed.
Bottom line, Merchant’s remain the winners through these Interchange expenses decreases while issuing banks are still the biggest losers, but not as much as originally feared.
When Do The New Merchant Services Rules Go Into Effect?
The Final rules will go into effect on October 1, 2011. But beware, only a small portion of the nation’s merchant community will receive the benefit of the reduced fees beginning on October 1st. Most of the merchant population is at the mercy of their acquirer’s pricing strategy as to the timing and the amount of reduced fee benefit they actually receive.