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Debit Card Regulations

We've been hearing about it for a while and it has finally happened: The regulation of debit interchange. After fierce battling for more than a year, debit interchange is to be regulated to $.21 per transaction and .05% per transaction. This will apply to all debit card transactions, PIN or signature as well as Ecommerce/Key-entered transactions. It's not entirely clear when and how this will take effect but probably in the next few months.

Retailers will be the big winners from this regulation. Obviously the larger (more transactions/year) retailers like Walmart will benefit the most, but small and medium size will reap savings also. There's going to be a lot of misinformation flying and aggressive marketing over the next year as many processors will take advantage of the turmoil, misinformation, and instability in the merchant account industry. I would strongly suggest exercising caution in anyone making sensational claims about lowering your rates. Major industry changes offer the greatest opportunity to get scammed into a bad merchant account. Just remember that every processor has roughly the same hard costs, so if they are unrealistically lowering fees in one place, they have to make them up somewhere else!!! You've been warned!!!

As a result of banks losing roughly 50% of their revenue from debit cards, we should all expect changes to our personal and business checking accounts over the next year. I know that all of my business and personal debit rewards have been canceled over the past 3 months. I think that debit rewards are the tip of the iceberg, and we should expect changes in debit and checking account fees and overall debit availability over the coming months. Some smaller banks have rumored that they will be dropping debit cards completely, so it will be interesting to see where this all ends up a year from now.