Debit Interchange Modifications October 2011

The semi-annual Visa and MasterCard interchange update for October 2011 is coming soon. Merchants can expect debit interchange modifications in support of the Dodd-Frank Wall Street Reform and Consumer Protection Act in addition to other interchange changes.

As a review, there will be two types of debit interchange- regulated and non- regulated depending on whether the card issuing bank is exempt or not. A Card Issuing Bank is considered nonexempt from the regulated debit interchange rates when the banks assets, together with its affiliates, exceed $10 billion.  Under the law, the maximum interchange fee that a non exempt card issuer may receive for an electronic debit transaction (signature and pin debit) will be $0.21 per transaction, plus 5 basis points. This provision is effective on October 1, 2011. That is not the maximum merchants will pay to processors, just the maximum the card issuing bank can receive.

The Board also approved an additional $0.01 adjustment towards the issuer’s debit card interchange fee if the issuer develops and implements policies and procedures designed to achieve the fraud-prevention standards outlined in the interim final rule, which is still open for public comment until September 30. Banks will likely quickly qualify for the extra $.01 as they try to eek out as much as they can under the new regulation.

For merchants to receive the new non-exempt debit rate:

  1. The merchant must have a price plan ( schedule A) with pass through interchange indicated.
  2. OR

  3. The merchant processor must pass on the savings.

If you’re not sure whether you can qualify for new interchange rates, contact us for a free consultation. We’ll need to see a merchant statement and a copy of your contract pricing, usually with “Schedule A”  at the top. A proposal you received is not adequate for review.