Headline News: Affecting All US Business Owners Accepting Credit Cards!

A Brief Explanation of the Durbin Amendment for Online Business Merchant Account Members

The Durbin Amendment has ruffled feathers for those who hold an online business merchant account. It was only recently added to the Dodd Frank Wall Street Reform and Consumer Protection Act back in 2010, but consumers are already starting to see the effects. Introduced by senator Richard J. Durbin, it was designed to limit transaction fees billed to merchants by issuers like Visa, MasterCard, Discover, and American Express that were consequentially added to merchant services provider charges.

These fees, also called swiping fees, were once an outrageous 44% per transaction. Now, they have been capped at 1-3 cents for small business transactions, and 12 cents for banks holding more than $10 billion in assets. Seeking to address the differing needs between large scale and small businesses, it was initially welcomed and celebrated by retailers and consumers alike. The Visa-MasterCard duopoly created a coalition to make a profit off of swiping fees, supposedly designed for fraud protection and overhead cost coverage. Although it was initially praised as a form of justice against credit card companies, it is now heavily criticized.

However banks once depended on these high fees from merchants who accept credit card payments to offer their free checking accounts and reward programs. A rise in charges for these services once included with a card or bank account is due to that fact that offering them is no longer profitable anymore. The observed results of the amendment in reality did now offer the promised lowered prices from big box retailers as promised. Although the lowered charges were supposed to lower costs for consumers by proxy, Total-Merchant-Services has observed that businesses haven’t responded how their incentives intended. Critics of the amendment argue that the only thing it really affected was the account holder’s ability to access free checking and rewards programs from their banks, not lower prices in stores.

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