How Does the Durbin Amendment Affect my Small Business?

Part One

What exactly is the Durbin Amendment? Senator Richard Durbin from Illinois introduced the amendment in to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed by Congress in 2010. The amendment gave the federal government the power to set interchange rates for debit card transactions. The amendment went into effect in October of 2011 and considerably lowered the debit interchange rates by almost 95%. 
You could possibly be thinking, my organization does not take debit cards. I do not have a pin pad or give cash back. The truth is that more than 50% of all electronic transactions nowadays are on some type of debit card. The majority of those transactions are signature based, meaning devoid of the consumer inputting his pin quantity. 
A debit card differs from a credit card in that a debit is tied directly for the customer’s account and no credit is given by the bank to fund the transaction. There are two forms of debit transactions, signature and pin based. Signature debit is just a transaction without having a pin quantity and pin based is often a transaction with one. 
The Durbin amendment regulates the signature based debit transactions by setting the rate and transaction fee that the banks can charge you, the compact enterprise owner. Essentially, it really is cost controls. 
The reduction is really considerable. In the past, debit card processing rates, or debit interchange rates, had been set by Visa/MasterCard at a rate of 0.95% + $0.20 for Visa and 1.05% + $0.15 for MasterCard. Beneath the Durbin Amendment, these rates had been decreased to 05% + $0.22 for each Visa and Mastercard. 
Greater than six months have passed due to the fact the regulations went into impact and sadly the majority of merchants have not taken advantage of these savings. In numerous circumstances, if your business enterprise is a restaurant or retail retailer with an average transaction less than $100, you should be saving 40% or extra off your monthly processing charges. From quite a few corporations, that translates into a large number of dollars per year. 
This concludes the first component of our two part series on the Durbin Amendment. Inside the second portion with the series, I'll talk about why merchants aren’t saving below Durbin and what action you'll be able to take to ensure your small business realizes the Durbin savings. Do not forget to quit by and take a look at our web site and fill out a lead form to begin saving on credit card processing and much more. 

Next entry

Previous entry

Related entries

Similar entries

Facebook Google Plus Linked In Twitter Youtube