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What Does The Durbin Amendment Mean To Small Business Merchants In America? Explains

Sarasota, FL – July 13, 2011 –, a leading merchant services provider of credit card processing, is pleased to announce they have released a new article on their site titled “What Does The Durbin Amendment Mean To Small Business Merchants In America?” This amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act was to take effect July 21, 2011, but has been pushed back to October 1, 2011.

The Durbin Amendment originally aimed to have the Fed set a maximum debit card interchange fee of 12 cents per transaction for banks that had $10 billion or more in assets. However, the final interchange fee to come into play in October will be closer to 21 cents per transaction, and in some cases more. The current industry debit credit Interchange fee averages 44 cents.

“Issuing banks are still the “biggest losers”, but not by as much as originally proposed. And merchants remain the winners, yet it’s highly unlikely most merchants will receive the benefit of the savings because of the acquirers pricing strategy” said Gino Kauzlarich, co-founder and owner of merchant services provider, And not all debit cards will be affected by the Durbin amendment. Debit cards issued by small banks with less than $10 billion in assets are exempt. This means that there will be a two-tiered merchant services pricing structure.

The Rules regulate debit Interchange, not discount, which is the bundle of costs that most merchants pay. Mr. Kauzlarich warns, “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. If your merchant services pricing program is tiered, or your merchant statement is coded with “BB” or “ERR,” watch out! You are paying hidden mark-ups and down-grade fees that you are unaware of, and you will likely be receiving little, if any of the savings provided for by the Durbin Amendment.”

Mr. Kauzlarich recommends looking for a merchant services provider who has consistently low rates, and will feature a “true” interchange pass-through, “Only those merchants on a “True” Interchange Pass-Through pricing program will receive the full savings benefit on their credit card machine. So make sure you are on an Interchange Pass-Through pricing program that passes all Durbin Amendment savings through to you.”

The impending loss of large amounts of signature debit card interchange fee revenue, especially the expensive rewards cards, that will begin in October will likely motivate large card-issuing banks to issue many more pin card products rather than signature debit card products, which also have the benefit of reducing their risk. “That means most merchants should own a PIN pad,” said Mr. Kauzlarich.

The law mandates that every debit card transaction has to be able to be processed on at least two networks, rather than one. And merchants are empowered by the law to direct the network routing as they see fit, in advance, with the acquirer.

Beware of trying to select a lower cost processing network over a higher cost network without evaluating what, if any, additional fees exist for the service. And it is a dynamic market which routinely changes as the networks jockey their rates as they compete with each other. And now many merchant services providers are coming out with a new additional monthly fee charge for “lowest cost routing services”.

The only way to decide which network to select or if the additional costs for “lowest cost routing services” is worthwhile, rather than wasteful, is to analyze your actual transactions processed by network provider. What’s “right” for one merchant may be very “wrong” for you, because the ultimate cost you pay is determined by the card product presented by your consumers. And those products vary widely by geographical region.

Make sure you choose a merchant services company that is able to perform a skilled merchant statement analysis by processing network, and has the knowledge base of what ALL of the available processing networks are charging for services, to determine which processing network is most advantageous to your business.

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Established in 1995 by founders Gino and Julie Kauzlarich, is a leading provider of today’s most innovative and cutting-edge wireless credit card machine services. Their innovative method of offering credit card merchant services and solutions through a consultative team approach designed to increase merchants’ bottom line profits ensures their merchant members always receive optimal rates when accepting electronic payments while also increasing total sales, accelerating cash flow and improving efficiency.