This Guy Has Money To Burn
Do You?
The Durbin Amendment requires the Federal Reserve to set a fair debit card interchange rate for all merchants. Depending on a merchants processing company and contract these interchange transaction fees could be reduced by as much as 40%-70%(the percentage depends on an average ticket amount).That's a lot and it's expected to cost banks approximately $7 billion in 2012. Remember Bank of America trying to recoup some of that money with new consumer debit card fees in October 2011? It was a publicity nightmare for Bank of America. To stay in some positive light with the american public Bank of America now runs commercials about lending money to a hot dog stand decades ago.
Targeting small business avoids the negative publicity witnessed when trying to charge consumers, so now big banks are making up that loss revenue by legally overcharging small business. Having studied the law, big banks and processing companies have found or even manufactured legal loopholes not to pass the Federal Reserve "fair" rate on to all small businesses. The loophole is found in a contract that most small businesses sign when initiating a card processing service. If the contract doesn't state the exact term:"wholesale interchange plus", then the Federal Reserve fair rate does not have to be passed on and isn't being passed on in most cases. Big box retail has always been set up on an interchange plus pricing contract and that's whom lobbied Washington the hardest. As of October 2011 approximately 85% of all small businesses were not automatically eligible for the deep discounts intended for them under the Durbin Amendment. Small business is estimated to receive less than $1 billion in savings now. How fair is this? $7 billion for big box and less than $1 billion for small business.
Some big banks and processing companies are lowering rates for a few months to deceive merchants into thinking that they have received the Durbin Amendment discounts, only to raise them back up after some time passes. Other big banks and processing companies have told merchants that they have wholesale interchange plus, so no need to worry right? Sure they have wholesale interchange plus, but it's on a single rewards card that is only being used once a month by a sole customer.
Credit and debit card processing is a lucrative business with out many regulations. The government doesn't protect small business with regulations the same as it does the consumer. If you are a small business the government considers you a big boy, so you best keep your head on a swivel looking for that next uppercut.
Billions of dollars are at stake and small businesses deserve this discount regardless of contract terminology. Given the poor economy small business merchants are the one's that can least afford to help subsidize overhead discounts to big box retailers and big bank executive bonuses, but that's what's happening.
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| Senator Dick Durbin |
The Durbin Amendment is the most underrated small business story in years. Nearly every business in America was effected. As of Oct. 2011 there is an 85% likelyhood that small business is overpaying for debit card processing. If you are unsure as to whether your business is receiving the discounts prescribed by the Durbin Amendment, http://www.best-creditcardprocessingrates.com/ offers a free no obligation audit of your current processing statement. Additional free services are no set up fees, current contract buyout and no new equipment to purchase.
A free audit/costs analysis report will detail your current costs and list an itemized breakdown to all potential savings. You will be amazed! It's free and we are happy to do it.
For more information on this subject please feel free to watch the below video that chronicles The Durbin Amendment. In their own words this video features Sen.Durbin, The Federal Reserve and the House Financial Services Commitee.
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