Debit card swipe-fee reform went into effect Saturday, but there is still a chance quick-service restaurants are not out of the dark when it comes to high interchange fees on consumers’ debit-card purchases.

The Federal Reserve, under the Durbin Amendment passed by Congress, had been asked to make sure that interchange fees were “reasonable and proportional” to the cost of processing transactions. It announced in June that fees merchants paid for debit-card transactions would be capped at 21 cents per transaction starting October 1.

However, according to the National Restaurant Association (NRA), major card companies such as Visa and Mastercard have threatened to strike back against the new legislation by charging the maximum fee for small-ticket purchases.

“The more expensive the ticket, the better the advantage under the new rules,” says David Koenig, vice president of tax and profitability at the NRA. “For so-called small-ticket transactions, in many cases, with Visa and Mastercard going up to the maximum amounts that can be charged under the law, those types of transactions will see higher fees.”

The Durbin Amendment was included in the Dodd-Frank financial services reform bill Congress passed in 2010. It was passed after the NRA and other merchant groups complained about rising swipe fees implemented by card companies.

“Our members would receive notices from them two, maybe three times a year with word of increasing fees for no particular reason,” Koenig says. “So the system was totally broken.”

According to the NRA, merchants were paying an average of 44 cents per debit card swipe prior to the Durbin Amendment.

Initially, in December, the Federal Reserve proposed capping swipe fees at 12 cents per transaction.

“The fees that were implemented October 1 were not as good as we hoped for, but overall better than what was the case prior to the implementation of the Durbin Amendment,” Koenig says.

The Durbin Amendment applies only to debit card swipes and not credit cards. Koenig says this was “what was most feasible to move forward” politically.

“While this goes a ways toward addressing those concerns [about rising debit swipe fees], it’s certainly not good enough,” he says.

The NRA has educational webinars archived on its website for members that help operators understand what they must do to benefit from the Durbin Amendment. The association is also encouraging the major credit card companies to get on board with reform and not charge maximum fees on small-ticket purchases. 

By Sam Oches

Finance, Growth, News, Restaurant Operations