Merchant account organizations may seek to misuse Durbin Amendment

While the Durbin Amendment will regulate interchange fees, some expert worry that small businesses will be taken advantage of and never see penny of the reduction or even be tricked into higher overall rates.

Phil Hinke, a consultant to e-commerce businesses on credit card matters, recently contributed an article to Practical eCommerce advising merchants to avoid proposals from merchant account providers that offer a small, if any, percent of the fee reduction available by a new law which caps debit card interchange fees.  

“While your merchant account provider will not have to pay more than the capped debit interchange fee, the provider does not have to pass any fee reductions to you, the merchant,” Hinke wrote, Practical eCommerce reports.

The Durbin amendment, set to take effect on July 21, requires banks and card issuers to cap interchange fees. The rule does not include the fees merchants pay to their merchant account providers.

According to Hinke, key people in merchant account organizations have reported that the Durbin Amendment is a potential boon as they will not have to pass the fee reduction on to their merchants. Some merchant account providers will provide the 100 percent fee reduction, while others, he warns, might do something worse.


Comments are closed.