Senator Durbin of Illinois has seen his bill approved by a Senate majority. This bill is supposed to send shockwaves throughout the credit card processing industry.
http://durbin.senate.gov/showRelease.cfm?releaseId=324958
This bill has two distinct measures and we have provided those below along with our commentary:
1. The Durbin amendment would direct the Fed to issue rules to ensure that debit interchange fees are reasonable and proportional to the processing costs incurred.
What exactly does this mean? I don't see any numbers and why as a small business should I trust the Fed to have my best interests in mind? This measure has no value and if fees are even reduced in any slight measure we can surely expect the deficit to be made on up on the credit card interchange fees. Remember, Australia tried this already and even when fees were reduced there was no measurable effect to show savings for the consumer. Many businesses just pocked the extra profit.
Additionally, who is going to pay the Fed to monitor the debit interchange fees? We, as taxpayers, are responsible for this financial burden. In effect the consumers don't really save as the expense is really just moved around rather than eliminated.
2. The Durbin amendment also prevents card networks like Visa and MasterCard from penalizing sellers for offering discounts to customers for using cash payment.
This is redundant because many merchants already do this. This penalty was never really seriously enforced on a national scale so merchants who have offered discounts for cash customers in the past will continue this practice.
Ultimately, we at Ideal Cost believe that this is really just a smokescreen and will not have a huge impact on the credit card processing industry. One thing that we continue to note is that politicians continually attempt to protect businesses that swipe credit cards, but often neglect those who key-punch or have their customers key-punch their credit card numbers in a non face-to-face environment. At Ideal Cost, we don't get paid for policy, we get paid for results. To save on your credit card processing today, trust the industry experts rather than the government to have your best interests in mind. Visit www.idealcost.com for more information.
