Durbin Amendment Rate Changes to Apply to Card Not Present / E-commerce Merchants

               By Andrew Moran

                9/2/2011

Hot off the press – some BIG breaking news as of today in regards to The Durbin Amendment!

The Durbin Amendment was part of 2010’s bank reform act, capping interchange levels on check cards significantly lower than current rates, and is set to go into effect October 1st, 2011.  The big news announced today, however, is that these rates will apply to card not present transactions as well, such as manually keyed in and E-commerce transactions.

Where before these kinds of transactions would typically see discount rates typically in the 2.5% range (with a competitive rate generally being anything under about 2.5%), this new provision will allow merchant account providers to get closer to HALF A PERCENT (that’s .5%) for check card transactions.  For most E-commerce merchants, check cards typically will constitute around half the volume of transactions they’ll see in a given month.

So bottom line is ecommerce / card not present / MOTO merchants can see a 1-2% drop in their effective rate. 

The Durbin Amendment does not, however, stipulate that credit card processors are required to pass these savings along to their merchants.  Certain pricing structures will automatically see the benefits of this reduction on October 1st, others will see no change in rates at all as of October 1st.  Its simply a matter of the pricing platform your provider has placed you on.  And if you’re like the vast majority of ecommerce merchants priced on a tiered, ERR, or billback pricing system, you are not in line to benefit from these savings.  

To find out if you are currently on interchange based pricing (and set to take advantage of this change), or if you are not currently on interchange based pricing and would like to be, please feel free to contact us.

Merchant Solutions, LLC

1350 Main St, Suite 206

Springfield, MA 01103

Phone: 866.326.3480

Email: contact@merchantsolutionsllc.com

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