What is the Durbin Amendment?
In the Dodd-Frank financial reform bill passed in 2010, the Durbin Amendment charged the Federal Reserve with establishing a reasonable and proportional rate for debit cards issued by banks across the country. This "cap" on the rates that these banks can charge will provide your business with savings on both pin and non-pin debit cards that you accept at your business. The final rule, which established this cap, went into effect October 1st, 2011, and has effectively reduced the cost of regulated debit cards from an average of 44 cents down to about 24 cents per transaction.
In the past months, "Durbin Compliant" has been a term tossed around the industry. While most companies are setup to pocket this rate reduction, we feel that being Durbin Compliant will show you that your merchant account is configured to receive these reduced rates automatically. Furthermore, it will be a notice to unscrupulous sales agents who claim various things including, "Your processor is not Durbin Compliant," and "You need to be Durbin Compliant." Many agents will try to sell you "special" equipment, including pinpads and terminals, which they claim are "Durbin-Ready." These claims are nothing more than gimmicks.
To put it simply: With Tailored Transactions, if you are accepting a card that is regulated by the Durbin Amendment, you will receive the full savings automatically.
Key Features about the Durbin Amendment
Your business may now impose a $10 minimum purchase on credit cards you accept at your business.
Regulated Pin and Non-Pin Debit
Many businesses are already seeing an impact in these new rates and we will continue to pass the savings onto your account. No action is required on your part, you don't need special equipment, and you don't need to register with anyone!
Banks with less than $10 billion in assets (community banks, many credit unions, smaller regional banks) are exempt from the new Durbin Amendment caps.
Prepaid cards have been exempted from the Durbin Amendment for the time being.
New regulations will allow more competition in the pin-Debit arena by allowing transactions to be processed over competing networks. By April 2012, banks must allow their transactions to be routed to at least two independent debit networks.