Durbin Amendment to Dodd Frank Key Provisions

The Durbin Amendment to the Dodd-Frank Financial Reform Bill requires the Federal Reserve to regulate and cap Debit Card Interchange Fees collected by issuing banks with over $10 billion in assets.

Federally regulated debit interchange fees went into effect in October 2011. The Federal Reserve rules cap debit card interchange rates at $0.21 + 0.05% plus an additional $0.01 for costs related to fraud prevention, if the issuing bank meets certain standards and practices for preventing fraud. Federally regulated debit interchange rates apply to both Signature and PIN debit transactions, and to both card present and card not present debit transactions.

Minimum Purchase Amounts – merchants are now permitted to set a Minimum Purchase. Amount for credit card transactions not to exceed $10.

Maximum Purchase Amounts – Government Agencies and Higher Education Institutions are now permitted to set a Maximum Purchase Amount for credit card transactions.

Surcharge – merchants are not permitted to add a surcharge (fee) to a transaction amount however, merchants are permitted to give a discount or offer an in‐kind incentive for payment by any method of payment (cash, credit, debit etc). Merchants may not offer discounts that favor one issuer or network over another.

Debit Interchange Regulations – Require that Debit interchange Fees be “reasonable and proportional” to the incremental cost to the issuer processing the transactions. The Federal Reserve will establish standards for assessing whether Debit Interchange Fees (general use reloadable prepaid cards are exempt) are “reasonable and proportional.” Debit Interchange Rules were issued in June 2011 and went into effect in October 2011. Federally regulated debit interchange rates are $0.21 + 0.05% plus an additional $0.01 for costs related to fraud prevention.