Impact of Durbin Amendment Interchange Fee Cap on PIN Debit

The Durbin Amendment to the Dodd-Frank Financial Reform Bill requires the Federal Reserve to regulate and cap Debit Card Interchange Fees collected by issuing banks with over $10 billion in assets.

On June 29th 2011, the Federal Reserve released its proposed final rule to cap debit card interchange rates at $0.21 + 0.05% plus an additional $0.01 for costs related to fraud prevention, if the issuing bank meets certain standards and practices for preventing fraud. This cap will apply to both Signature and PIN debit transactions, and to both card present and card not present debit transactions. The proposed rule would go into effect in October 2011.

This proposed rule change has left many merchants wondering, if Signature and PIN debit are now capped at the same interchange fee, do I still need my PIN Pad?

In most cases, the answer to this question is going to be Yes. Since issuing banks with less than $10 billion in assets are exempt from the cap, debit cards issued by smaller banks and credit unions will still have a lower interchange fee for PIN Debit vs Signature Debit. Also, the Durbin Amendment requirement for two unaffiliated payment networks applies only to PIN debit transaction, and not Signature Debit sales. In theory, this would allow a merchant to choose a lower cost PIN payment network, resulting in a lower cost for PIN Debit over Signature Debit, even on capped interchange fees. In practice, this may not be workable or worthwhile for many smaller merchants. 

Burlington Bank Card strives to provide our merchants with secure and reliable interchange plus merchant payment processing, transparent pricing, and one-on-one personal service.

Burlington Bank Card always passes on true Interchange costs to all of our merchants: Pricing & Rates

Please call 1-800-758-1002 or contact us to learn more about Interchange Plus Credit Card Processing, and how Burlington Bank Card can help your business get the full cost savings provided by the Durbin Amendment and Federal Reserve caps on Debit Card Interchange Fees.