Can the Durbin Amendment capping fee help your business?

Ramifications of the Durbin amendment have been experienced across whole nation. This has caused banks to increase debit account and checking account fees, eliminating various reward programs they used to offer and introduction of hidden fees to make up losses caused due to the Durbin amendment. Though it is sad to say still after so many hikes, the benefits of the Durbin amendment are not shared with consumers alike. The Durbin amendment was implemented with a good will that lower interchange fees on debit card will lead to increase in savings and which would be ultimately passed on to consumers. If you are a business owner, it is a must that you should know you capitalize the Durbin amendment.
Still after 6 months of the Durbin amendment implementation, many people are not aware with exactly it is. They would have cared hardly to notice a decrease in debit card swipe fees on monthly statement which you get from your provider. Let’s see impact of the Durbin amendment on consumers as well as businesses.
For consumers : The Durbin amendment implementation has been a mix bag for consumers, as on one hand they are getting charged lower interchange fees on the swipes but on the other hands, now free checking as well as various reward programs have been withdrawn. If your bank has more than $10 billion in assets, you would be effecting by all these changes. This is lead to shift of consumers from large banks to small banks which have less than $10 billion in assets as they are not affected by the Durbin amendment and are continuing to provide all benefits, they were providing to their consumers before the Durbin amendment’s implementation.
For merchants: For merchants, the Durbin amendment has been a mixed bag too. Due to withdrawal of various incentives and schemes on debit cards, now consumers prefer to pay in case, check or through a credit card. At present 35% of noncash transactions take place through debit cards but now, this number is bound to decrease.
Setting up minimum amount of purchase
As now after the Durbin amendment implementation, now merchants can deny credit as well as debit card payments for amount less than $10, option left with consumers is only paying through cash. Now if you have to purchase a bottle of water, now you need to have cash in your pocket.
Thus, it can be concluded that the Durbin amendment will be affecting your business.

Durbin amendment summary and impact

National retail federation has lobbied hard for regulation of interchange rates for debit as well as credit cards. They got it finally through Durbin amendment. But many people are not aware with what exactly Durbin amendment is, how it will help them. Thus, in this article Durbin amendment summary along with its impact is being discussed. The main question in front of consumers is if it will really help consumers or card issuing agencies will come up with alternatives.
Durbin amendment summary
When your card either debit or credit is run through a terminal, a certain fee is charged by your card provider which is generally called swipe fee. Before Durbin amendment, VISA and MasterCard had monopoly on card business and they could decide any swipe fees and it was working to their advantage. Business had no choice with them but to include this fee in total costs and it was an added expense for consumers.
Most of consumers were not aware that how any business was paying a fee when every time a card was swiped by them.  This meant that all shoppers were not only paying interest to their card issuing bank but also were losing purchasing power with every swipe. Since most of consumers were not aware of this hidden fee, they could not argue for it.
Now once Durbin amendment will come into force, federation will be reducing the interchange fees by over 70 percent. This way though banks will be on losing side but consumers will benefit hugely. Bank of America has projected that after Durbin Amendment, it might lose 60-80% of revenues it earns from debit cards. The loss will be passed on the consumers and it will impact severely impact their ability of lending money to small businesses.
To avail the benefits of Durbin amendment, you need to make sure that you are set on current pricing plan and it is not applicable on all banks. If your bank is allowed in Durbin amendment, then you must make sure that your plan is set correctly or all the benefits will be passed onto your bank. If your processor is not passing those benefits to you, then it is time to change it as they are getting all those benefits and not passing it to you. This was Durbin amendment summary and I hope it will become clearer and would be able to understand its impact on you.