Restaurant Owners Will See Savings as Fed Caps Swipe Fees
- Published on Thursday, October 13, 2011
The Durbin Amendment, which was included in last year's enacted Dodd-Frank Financial Services Reform law, gave the fed authority to establish interchange fees on debit card transactions that are "reasonable and proportional" to the costs of processing the transaction.
The Federal Reserve issued final rules implementing the amendment in June that cap the “swipe fees” that merchants pay for debit-card transactions at 21 cents per transaction – less than the average 44 cents that merchants pay for debit-card transactions today, but a significant increase over the 12-cent swipe-fee cap that the fed proposed in December.
The National Restaurant Association, a leading member of the Merchants Payments Coalition which represents millions of card-accepting merchants, expressed strong concern and disappointment regarding the final rules. “The Federal Reserve appears to have caved to lobbying by the big banks and debit-card companies and ignored the spirit of last year’s Durbin Amendment, which was aimed at fixing a broken U.S. debit-fee market and bringing fairness to merchants and consumers who have no control over rising swipe fees,” said Scott DeFife, Executive Vice President of Policy and Government Affairs for the National Restaurant Association.
By capping fees, the regulation will provide many restaurants with some financial relief from one of the fastest-rising and uncontrollable costs involved in running a restaurant business; however, the relief is not nearly as significant as the NRA had hoped. Restaurant owners should check with their credit card processor to see that savings are passed back to them.
Heartland Payment Systems, providers of Full Course Business Solutions, an exclusively endorsed suite of payment products available to Texas Restaurant Association members, has pledged to pass along what it calls “Durbin Dollars” to its merchant clients.
"We are the company that is going to send every single dollar that was mandated in the Durbin legislation to the place it was intended, to our merchants' bank accounts," Bob Carr, Heartland's chairman and chief executive, said.