US Bankcard Services Industry Blog

Monday, June 20, 2011

News for You: Debit Interchange and the Durbin Amendment

There are rumblings in Washington that could affect merchants, processors, acquirers (MSP/ISO) and consumers…maybe even the whole financial world as we know it.

Every swipe of a debit card, pin number entered and signature signed saves you time, but how much are you willing to pay for convenience?
A law called interchange legislation is meant to reduce the amount of money major retailers pay every time you make a debit card transaction. The law would cut fees paid by retailers by 70 to 90 percent. This means they'd only pay seven to 12 cents per transaction, regardless of what you spend.
But bankers say cuts to one, could mean costs to others, namely them, and ultimately, you.
Regional President for Mutual Bank Chuck Viater talked to NewsCenter 16 about changes bank may have to make if interchange legislation were to take effect. "There's a whole host of creative ways that any business would find to replace lost revenue … they may change their fees, they may create a fee that doesn't exist," Viater said.
Other changes banks could have to make include limiting the number of purchases you make per month with your debit card, restricting how big those purchases can be, or even ending free checking.
Understandably this legislation has plenty of consumers upset. Audrey Evans uses her debit card regularly and gave her opinion on the law. "I don't think it's very fair. It's my money. I should get to spend it when and how I want."
Interchange legislation passed last summer and is set to take effect on July 21,2011, but officials say there's no need to panic just yet. Congress is working on passing the Debit Interchange Fee Study Act of 2011. That law would push off interchange legislation for another two years and allow time to examine potentially negative consequences.
For now, it's a waiting game. Viater said for bank customers, the most important thing is to keep themselves informed. "If something happens in terms of changes in how your bank account works, your bank will notify you," he said. "So you need to be just aware. Don't think of it as junk mail. Open the envelope, find out what's inside and find out what your bank is telling you."
Interchange Debit Card Limitation Article

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