Durbin Amendment Debit Card Regulations

Greg Blackman / Durbin Amendment Debit Card Regulations

The new regulations only apply to certain debit cards that have been issued by banks with $10 billion or more in assets, which is roughly 60% of all debit cards, but a much smaller percentage of overall transactions. Less than 10% of our merchant’s transactions occur on debit cards that will be affected by the new regulations.

Visa / MasterCard Financial Institution Reaction
As expected, Visa and MasterCard and their issuing financial institutions have been quickly making adjustments to make up for the lost revenue. Here is what we’ve seen so far:

1. They’re increasing interchange fees on non-regulated debit cards
2. They’re increasing fees on credit cards in October 2011 and have announced additional increases that will go into effect in April 2012.
3. Financial institutions affected by the legislation are working to shift customer usage away from the regulated debit cards to the unregulated and higher margin debit/credit cards. For example, many banks have announced that they’ve started charging customers a monthly fee for using a debit card.

With these changes, we expect overall regulated debit card usage to decline and non-regulated debit cards and credit card usage to increase. That, coupled with the increased rates on credit cards, we believe will most likely lead to a wash in overall fees. If that’s the case, we’ll be back to where we started.

Key Components

• The majority of small business sales under $50 are made on debit cards.
• With the Durbin Amendment, savings are available to small business owners on most debit card purchases.
• Security First Merchant Services is updating our pricing in order to help small businesses take advantage of these savings. 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 Security First Merchant Services today.

Security First Merchant Services is a business-focused payment solutions company that strives to provide payment processing, small business loans, and credit repair services with a high level of detail and flexibility.