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.
Read more about Durbin amendment summary at http://www.worldpay.us/Durbin.html.
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