More merchants accepting debit in wake of Durbin Amendment

Merchants have new incentives to accept debit card payments as new legislation has lowered the cost of debit card swipes.

In the past, merchants have been reluctant to accept debit and credit cards, especially those who sell small-ticket items. The cost has always outweighed the benefits, according to

The recently passed Durbin Amendment, which cut the amount that banks and card issuers were allowed to charge merchants for each debit card swipe, was meant by lawmakers to save merchants money.

Today’s consumers prefer to use debit, reports. By accepting debit cards, merchants will gain a tremendous amount of new clientele. In addition, the new cap puts merchants in better fraud-loss positions because debit shifts the fraud liability onto the issuers.

Critics of the Durbin Amendment say that the rule has had a negative impact on retailers, customers and the banking industry.  

The rule implemented “government price controls that resulted in a 45 percent loss in revenue banks used to provide low-cost accounts, fight fraud and maintain a safe and efficient U.S. payments system,” Kenneth Clayton, the chief counsel of the ABA, said, according to

Banks have lost revenue that has been used in the past to cover fraud costs. As a result, the industry has raised its service fees on customers. Card issuers have dropped their debit card swipe discount fees for small-ticket retailers, which drastically raises the cost to process debit card transactions for inexpensive items.

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