ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Financial Overhaul Bill To Provide Much Needed Relief To Retailers

Financial Overhaul Bill To Provide Much Needed Relief To Retailers

July 11, 2010 | Updated on July 11, 2010
Add to Favorites:
The content is accurate at the time of publication and is subject to change.

On Friday morning, when the Congress arrived at a decision over the swipe fees being charged on debit cards, there was a shout of joy from the innumerable merchants and retailers who were stretching themselves thin to pay these fees to the banks and other credit card lenders.

The conference committee from the House and the Senate, on the morning on 25th July, met to take a vote on a various financial services. The vote that stood at 27-16 proved to be in favor of the recommended changes. This bill on financial reforms has the highly debated Durbin amendment which proposed for the reduction in the interchange fees, which are nothing but swipe fees being paid by the retailers to credit card lenders when any person paid for their purchase using credit or debit cards.

People who voted in the favor of the Durbin amendment (named after Richard Durbin who proposed it) felt that this would give the retailers an option to manage their costs better, especially when dealing with banks and credit card lenders. These financial institutions charge swipe fees to the merchants which are often in the range of 1% to 2% of the total transaction cost. The pet peeve of retailers all this while was that in most cases these fees were more than the processing charges for debit cards.

According to the Durbin amendment, the transaction fees should be in proportion to the total cost of purchase and it must be charged only for cards issued by banks that have lesser than $10 billion worth assets. Another feature of this amendment is that it gives the retailers, the right to offer discounts to customers if they opt to pay by debit card, checks or cash. There is also a $10 limit that the merchants can set to accept credit card payments without interchange fees. This amendment will prove to be a blessing to small companies who are trying hard to curtail ever increasing costs. Not only can they save on the interchange fees, they can even translate these savings as discounts to their consumers.

While this legislation has a positive impact on the retailers, the banks and other credit card lenders are not happy with this move. The potential loss that these financial institutions will have to be prepared for is to the tune of $5 billion.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!