Debit Card Reform Cuts Merchants' Average Swipe Fee 47%

New limitations on the interchange fees financial institutions can charge for debit card transactions have cut retailers' average "swipe fee" nearly in half, from 43 cents to 23 cents per transaction.

The Durbin Amendment, named for Sen. Richard Durbin (D-IL) and part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, went into effect on October 1, 2011. It caps the per-transaction fee at 21 cents plus 0.05% of the transaction's value, with an additional discretionary one cent for institutions employing effective fraud prevention initiatives.

Payments processor Heartland Payment Systems, collecting data across its portfolio of 250,000 merchant locations between October 1 and October 23, revealed that 64% of its signature debit sales volume qualified as regulated by the Durbin Amendment. The average signature debit non-regulated effective is 1.56%, while the average regulated effective rate is 0.82%.

Heartland, the nation's fifth-largest payments processor, calculates that the Durbin Amendment savings have already totaled more than $11.7 million for merchants: approximately $7 million for retailers and $4.5 million for restaurant and lodging merchants.
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