Durbin Amendment to hit merchants for returned purchases

Lower debit card interchange fees will hit the financial services industry in early Oct., but questions, including what happens when an item is returned, are still unanswered and causing concern among retailers.

The Durbin Amendment did not address what happens to the interchange fee if the purchase is returned, according to Retailers may encounter a loss on a refund because credit card processing charges are generally not refunded to merchants when a transaction is reversed.

It is also possible that some credit card processors may be able to charge a second interchange fee after an item is returned.

Chargebacks and returns are expensive for merchants and those who have higher percentages of chargebacks may have to pay higher fees, according to

Financial experts agree that credit card processors and banks could take advantage of this fee in order to recoup the massive amounts of revenue they are losing due to the Durbin Amendment, although most experts think it would be difficult for processors and banks to run the system in reverse and hard for them to develop a system that accurately and efficiently refunds credit card processing fees.

Some speculators in the financial services industry have suggested that merchants charge a return or restocking fee, reports. The potential for angry reactions from customers, however, may prevent merchants from doing so.

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