The Durbin Amendment and Ecommerce Merchant Accounts

 Earlier this year I posted an article on how the Durbin Amendment adversely affected a merchant client of mine. When looking into his statements it became clear that he processed multiple transactions at a low dollar amount. Instead of the Durbin Amendment saving him money he was actually being charged more money and it all boiled down to what types of debit cards were being processed. 

 

Regulated vs Non-Regulated Banks
In the Durbin Amendment they established two ratings for banks based on their assets. If the card issuing bank is an exempt bank (also known as regulated bank) it means that they have assets of over $10 billion. If the card issuing bank is a non-exempt bank (also known as non-regulated bank) then they have assets less than $10 billion. But what does this mean to you as the merchant? Well, it means that you pay a different fee based on the bank that issued the debit card. I will continue looking at the same merchant as I did in my previous article. His fees after Durbin was put into place are:          

Regulated Debit Fee:
0.05% + $0.21

 Non-regulated Debit Fee:

1.60% + $0.05

 

Previous Fee (before Durbin Amendment took effect):
1.190% + $0.10

 

Where will a merchant start seeing a financial gain with the Durbin Amendment?
With our example client in mind, he really will not see a financial gain with the Durbin Amendment due to his price point. However, this is not the case for everyone. You will see below different tables that reflect various price points. You will see that an average price point of $15.00 or more you will start to see significant savings when processing with Regulated Debit Fees.

 


 

Average Ticket Price: $5.00

Regulated Debit Fee

Non-regulated Debit Fee

Previous Fee

$0.2125

$0.13

$0.1595

 

Average Ticket Price: $10.00

Regulated Debit Fee

Non-regulated Debit Fee

Previous Fee

$0.215

$0.210

$0.219

 

Average Ticket Price $15.00

Regulated Debit Fee

Non-regulated Debit Fee

Previous Fee

$0.2175

$0.29

$0.2785

 

Average Ticket Price $25.00

Regulated Debit Fee

Non-regulated Debit Fee

Previous Fee

$0.2225

$0.45

$0.3975


 

Durbin Amendment Overall
It is hard for me to say the Durbin Amendment is great since we have had at least one client that has seen the harsh reality of the amendment. But I would say for most merchants the Durbin Amendment can save them a fair share when it comes to processing debit cards. The merchant will see increased savings with Regulated Bank Cards and will have to pay more with Non-Regulated Bank cards – hopefully in the end the merchant will see an overall savings in their total fees. And who wouldn’t like to have savings in fees? Every bit helps, right?

 

Leave a Reply

Log in