The Durbin Amendment goes into effect in a few weeks and one of the questions plaguing experts over the last few months is how the savings will be passed to consumers. According a recent survey; internet, catalog, and other card-not-present merchants will either pocket the savings or are undecided.
The survey was taken at the Direct Response Forum’s annual conference in August with the results being announced last week. Around 41% of card-not-present merchants surveyed said they don’t intend to pass on lower debit costs to consumers. 56% responded that at this time they were not sure what they planned to do with their debit cost savings. The results came from 169 of the executives attending the conference, each of whom has an average of 10 years experience in the payments business.
The Dodd-Frank Act, which includes the Durbin Amendment, was proposed last December and called for “reasonable and proportional” limits on debit card interchange. In June the Fed announced it will cap debit card interchange at $0.21 plus 0.05% per transaction, down more than 40% from the $0.44 average interchange fee on debit.
The bottom line: The consumer may never experience any savings, but the merchant has the ability to make that choice. And under the current economic conditions, businesses are able to earn a little more revenue, which will hopefully lead to stronger employment and a stronger economic. The effects of the amendment are yet to be seen, but you can be sure that new data will be available shortly as the amendment takes effect on October 1, 2011.
Cool! That’s a clever way of looikng at it!
Good idea! We’ll work on setting something up.