Durbin Amendment Changes Imminent
In a few days, the first stage impact of the Dubin Amendment (section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) will be official. This legislation was signed into law on July 21, 2010. The FED was given nine months to define the specific detail outlined in the amendment.
Although there are additional topics addressed by the amendment, the following changes may be the most immediately helpful for merchants:
- Merchants will be able to offer discounts to customers who use a particular card network (Visa, MasterCard, Discover Network, American Express, etc.)
- Merchants will be able to set a minimum transaction amount for payments made with a card (not to exceed $10.00)
In addition, certain controls are now being placed on the base cost for accepting debit cards. There are now two categories for these debit transactions – regulated and exempt.
The regulated rates are now controlled by the FED and represent financial institutions that have greater than $10 B in assets. These rates have recently been set by the FED at 0.05% + $0.21 (add $0.01 if the institution complies with certain fraud prevention standards).
The exempt category, still controlled by the networks (Visa, MasterCard, etc.) is for those institutions who fall beneath $10 B in assets. These rates are nearly the same as they were before; still less than credit cards and higher than PIN debit networks.
