The Durbin Amendment significantly impacted debit card processing fees, but lower interchange rates don't automatically translate to lower merchant costs. This episode provides crucial insights into why that is and offers strategies for ecommerce businesses to navigate the complex payment landscape and potentially reduce their processing expenses.
Key takeaways
Merchants must actively review their merchant account agreements to ensure they are benefiting from lower debit interchange rates due to the Durbin Amendment, as these savings are not automatically passed on.
Understand the difference between interchange fees, network fees, and processor markups to effectively negotiate with merchant account providers and optimize payment processing costs.
Explore options for debit card routing, as the Durbin Amendment introduced competition that allows merchants to choose different networks for debit transactions, potentially leading to lower fees.
Beyond interchange, focus on overall payment processing cost optimization by understanding all components of your transaction fees.
Recognize that the Durbin Amendment primarily affects debit card transactions; credit card fees operate under a different structure and were not directly impacted by this legislation.
The Durbin Amendment to the U.S. Dodd-Frank legislative package affects ecommerce merchants. That’s because the Amendment greatly lowers the rate — called interchange — that Visa and MasterCard charge for the processing of debit cards. But, importantly, it does not automatically lower the fees that merchants actually pay to their merchant account providers. Our guest today is a longtime veteran of the credit and debit card industry. He’s Sloane Bouchever, the founder of Interchange Plus Solut...
Frequently asked about this episode
What does this episode say about cost optimization?
Merchants must actively review their merchant account agreements to ensure they are benefiting from lower debit interchange rates due to the Durbin Amendment, as these savings are not automatically passed on.
What does this episode say about financial strategy?
Understand the difference between interchange fees, network fees, and processor markups to effectively negotiate with merchant account providers and optimize payment processing costs.
What does this episode say about payment processing?
Explore options for debit card routing, as the Durbin Amendment introduced competition that allows merchants to choose different networks for debit transactions, potentially leading to lower fees.
What does this episode say about regulatory impact?
Beyond interchange, focus on overall payment processing cost optimization by understanding all components of your transaction fees.
What does this episode say about cost optimization?
Recognize that the Durbin Amendment primarily affects debit card transactions; credit card fees operate under a different structure and were not directly impacted by this legislation.
