Earlier this year, the Dodd-Frank Act tasked the Federal Reserve Board with setting standards for debit card interchange. Yesterday, the Fed responded and shocked the industry with its preliminary proposal. New rules are required to be in effect by July 21st of next year.
For all merchants, Thursday’s announcement would mean a home run with lower debit card interchange fees. For Higher Education, it would be a grand slam if implemented as proposed. The key is “cents per” transaction, not “per-cents.” It’s similar to how ACH fees are handled. High dollar transactions, like tuition payments, would be charged the same interchange fee as smaller transactions. Wow!
What should your campus do now? Dust off your processing contract(s), Merchant Services Agreement(s). First, make sure you have unbundled debit card discount fees from credit card discount fees. Second, make sure your cost of processing debit will adjust down automatically in July. Third, contact us if you find any of this confusing or if you want assistance in reviewing your merchant agreement(s). Here’s a special e-mail address to use: debit-watch@touchnet.com.
Thanks for reading.
PS: Here are some other comments you might find informative:
- Toughey Talks Payments: “Debits Get Dinged”
- WSJ Market Watch: "Fed may act to curb debit-card fees"
- Yahoo Finance: "Fed proposes 12-cent cap on merchant debit fees"