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3 Ways the Durbin Amendment Can Help Your Business

Posted by Alex Neir on Tue, September 06, 2011 @ 01:57 PM
Durbin Amendment

3 Ways the Durbin Amendment Can Help Your Business

The Durbin Amendment has been highly debated since it was added to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. There are however, a few ways that it can help people with their business. Listed here are three ways that merchants will benifit.

1) The Durbin Amendment and what it means to business 

  • Under the Durbin Amendment, card swipe fees will be regulated to a lower rate.
  • Merchants will also be allowed to apply surcharges on purchases made with either credit or debit cards.
  • In either of these cases, the swipe fee is detracted away from the consumer.

2) Businesses consumers will benefit

  • It is speculated that consumers could see lower prices as a result of a swipe fee reform. A Fed Chairman has publicly said that he expects certain retailers in a competitive and low margin sector could drive down prices, while those in smaller competitive sectors may opt to pocket their savings. These are savings that could be noticable to consumers.

3) Merchants will benefit

  • Proposed fees will cover the risk of fraud and other overhead charges and as of right now the fees a major source of profit margin for banks offering checking accounts. As a result, the competition between banks and other financial institutions is causing profits to be used to subsidize free premium services like surcharge free ATM's and no charge checking accounts. If the fees dropped to the proposed 7 to 12 cent charge, this would surely create a much larger transfer of wealth to the merchants from the card issuers.

The Durbin Amendment is not without its flaws and criticisms, but the advantages of such an amendment is much more prosperous to the consumers and businesses in the log run.

Tags: Interchange Fees, Credit Card Processing Denver, Durbin Amendment