The Durbin Amendment Is Upon Us….. And ADKMS new Durbin Pricing Equals Real Savings for All Businesses
The Durbin Amendment went into effect October 1st, 2011 and many businesses will see a significant reduction in their monthly debit card processing fees. This isn’t just for pin-based transactions, but applies to all Visa and MasterCard logo signature debit cards, as well as card-not-present debit card transactions via Internet and phone order.
On average, you can expect savings of 30% or more over current debit card fees.
But the savings will not get passed along to merchants if you are on tiered pricing instead of Interchange plus. Let us introduce to you our pricing model and we will show you how to save a very significant amount of money.
What is the Durbin Amendment?
The Durbin Amendment is an addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This amendment imposes caps on debit card interchange fees as well as the ability to impose minimum values on bank credit card transactions. Durbin allows merchants to offer discounts to customers who pay with cash or debit cards.
The Durbin Amendment is Section 920 in the Dodd-Frank Wall Street Reform and Consumer Act, which is part of the broader Financial Regulation Reform and Consumer Act passed by the Senate in May 2010.
The Durbin Amendment was included in the Dodd-Frank bill by Senator Richard Durbin (D-Illinois). Among other things, it requires the Federal Reserve to set ‘reasonable and proportional’ rates and fees for debit interchange rate.
On June 29, 2011, the Federal Reserve ruled on the Durbin Amendment. The effective date for most of the Durbin requirements was October 1, 2011.
Based on their ruling, the Federal Reserve capped transaction fees for debit cards at 21 cents per transaction with an additional allowance of 5 basis points (.05%) of transaction value to account for fraud losses, and an additional $.01 cent per transaction for fraud prevention (if certain fraud prevention standards established by the Board are met). For the average $38.00 debit card transaction, the interchange fees will be around $.24, a decrease of about 45% from pre-Durbin rates.
What is the Impact of Durbin
- With the Durbin Amendment, savings are available to small business owners on most debit card purchases.
- The average savings on purchases between $15 and $50 made with a debit card can be upwards of 50% over current processing costs.
- The higher the cost of the transaction, the more the business can save.
If you are looking to maximize the savings over your current processing costs, call ADK Merchant Services today. Toll Free: 1-866-836-2861 Local: 716-785-6006
