The new limit on the amount payment processing networks can charge to businesses for processing swipe fees is now in effect.
A rule that limits the amount banks can charge to businesses for accepting a debit card transaction went into effect on October 1 and is expected to save merchants billions of dollars annually, according to U.S. Senator Dick Durbin of Illinois. The new fee limit was designed as part of Durbin’s amendment to the Dodd-Frank Act passed last year.
“These rules will give small businesses some relief from the unreasonably high fees that the Visa and MasterCard duopoly fix on behalf of the nation’s biggest banks, and consumers will finally begin to benefit from the increased competition, discounts, and lower prices that reform will bring,” Durbin said.
The new rule limits debit card swipe fees – charged for each debit transaction a business processes – to just 12 cents. Previously, banks charged a percentage of the total purchase value, and these averaged about 44 cents per transaction.
Banks argue that the changes will cost them billions of dollars per year, and they are already looking for new ways to boost revenues.