What You Need To Know

Learn about how regulations on various merchant interchange fees for debit card processors can affect your small business.

New federal regulations limit the interchange fees that certain debit card processors can charge merchants. Due to the Durbin Amendment to the Dodd-Frank Act of 2010, debit card interchange fees are now capped at $0.21 per transaction plus 0.05% of the transaction, which is down from $0.44 per transaction.

Interchange fees are fees that a merchant’s bank (acquiring bank) pays a customer’s bank (issuing bank) when the business accepts credit cards to compensate for transaction-related costs. According to the Heritage Foundation, the change will keep interchange fees closer to $0.12 per transaction.

However, interchange fees don’t always appear on your statements, making it tricky for small business owners to know how the fees affect them.

Who Will Benefit?

According to NMA CEO Heather Petersen, “A merchant needs to be processing a substantial amount to see savings from the recent amendments.” Restaurateurs are among those who may see lower bills, since customers tend to use debit cards on small ticket items. Petersen further explains, “In a business like a coffee shop that does less than $15 for the average ticket, you might see some savings on debit card transactions.”

The new regulations to interchange fees only affect a minority of merchants, says Petersen. What’s not affected? Credit card interchange fees, for instance. Also, fees for debit cards issued by smaller card issuers are capped for banks with assets of more than $10 billion.

Minimizing Card Fees

Even if your bank is subject to the new caps, card processors could shift fees elsewhere to make up for their losses. Financial institutions like NMA have opted to abide by the lower fees to attract clients.

Here are three basic ways to become better educated on interchange fees:

  • Follow Up – Make sure your account is set up for your specific type of business.
  • Negotiation – Talk with your acquirer or processor about ways to take advantage of lower debit card interchange fees. Tell them you want to be on the optimal pricing program for your type of business, and review your merchant statement with them to understand how all fees are reflected in your monthly.
  • Coursework – Take a course through a local small business development center on credit and debit card fee structures.