InterchangePlus Solutions CEO and President Sloane Bouchever spoke at length with Kerry Murdock, Publisher and Editor of Practical eCommerce Magazine about the effects the Durbin Amendment will have on Internet merchant’s debit card rates and fees.
Understanding the New ‘Durbin’ Debit Card Rates; Exec Explains
JULY 8, 2011 BY PRACTICAL ECOMMERCE STAFF
The Durbin Amendment to the U.S. Dodd-Frank legislative package affects ecommerce merchants. That’s because the Durbin Amendment greatly lowers the rate — called interchange — that Visa and MasterCard charge for the processing of debit cards. The final rate, as determined by the U.S. Federal Reserve Board on June 29, will be 21 cents per transaction, plus an additional 1-cent fraud charge, plus 5 basis points per transaction. The overall effect is a lowering of the interchange rate for debit card transactions by roughly 50 percent. But, importantly, it does not automatically lower the fees that merchants actually pay to their merchant account providers.
We spoke with Sloane Bouchever, founder of InterchangePlus Solutions, a merchant account provider, on the topic of what merchants can do to make sure they receive the interchange-rate reduction on debit cards.
Bouchever is a longtime credit card veteran, having co-founded and then sold e-onlinedata, a leading ecommerce merchant account provider.
Practical eCommerce: The Durbin Amendment affects debit card rates, which many of our readers accept in their businesses. Can you tell us what Durbin does to debit cards?
Sloane Bouchever: “Well, quite simply, the Durbin Amendment regulates the debit card fees that large banks can charge to merchants that accept transactions from their cardholders. So, the Amendment caps debit card rates [at roughly 22 to 24 cents per transaction], down from the current cost of approximately 44 cents a transaction.”
PEC: Why is Congress getting involved in what many observers believe should be a free market decision?
Bouchever: “That’s a very interesting question. I recently attended a speech by former U.S. Senator Christopher Dodd, co-author of the Dodd-Frank bill. Dodd did a really good job [in the speech] of taking us back to the worst days of financial crisis, which set the stage for this regulation and, hence, the Durbin Amendment. I think this is a case where Congress actually allowed Main Street to beat Wall Street. Retailers were finally able to fight back against the big banks, in terms of the actual debit card regulations. In my opinion, debit cards are basically just plastic checks, and since checks pass at face value, I believe Congress was just trying to add a modicum of fairness for consumers and merchants as debit cards replace checks in our economy.”
To read the rest of the Durbin Amendment interview at Practical eCommerce Magazine, please visit http://www.practicalecommerce.com/articles/2889-Understanding-the-New-Durbin-Debit-Card-Rates-Exec-Explains
