Last year congress passed legislation commonly known as the Durbin Amendment, charging the Federal Reserve Board to determine a standard interchange fee for processing a debit card transaction. They decided the new interchange fee would be capped at 0.05% + 21 cents. This fee will go into effect on October 1 of this year. It is not often that government involvement means lower costs for business owners, but this time you could realize some significant savings, particularly if you accept a fair amount of debit cards.
There are a couple of things you should keep in mind as this new fee is implemented.
As with many legislative-based reforms, there are complexities. In this case, the cap only applies to debit cards issued by very large banks – it does not include those issued by smaller, community banks or credit unions. While large banks issue the overwhelming majority of debit cards, the fact remains that some debit card interchange fees will not change.
Processors aren’t required to pass through these new lower interchange fees, so the best way to ensure that you are going to get them is to move to the Interchange Plus pricing model. The Interchange Plus pricing model is the only model that will automatically pass through the interchange fees at their exact cost, including the new lower debit card fee.
As an added bonus, when you move to Interchange Plus pricing, the new debit fee is not the only fee that can be effected. This model gives processors the ability to better analyze data and potentially offer you even more savings.
As the Michigan Academy of Family Physicians’ endorsed processor, we want you to know that this move can be very easy. If you are already processing with Midwest Transaction Group, all you need to do is call us at 888.599.2209. We can quickly review your statement project the savings you can expect. If you are not processing with us, we encourage you to contact your current processor and ask to be moved to the Interchange Plus pricing model. Again, it is the only way you and your business can realize the full savings of this debit fee cap. If they are unwilling to make that move an easy one, we can help.
