The Interchange amendment to the financial reform bill, sponsored by Senator Richard Durbin (D-IL), was adopted Thursday night. The measure gives the Federal Reserve authority to regulate Interchange fees, using a "reasonable and proportional" standard. The amendment also allows merchants to discount lower costs payment options and allows minimum card purchases. Once the Senate passes the financial reform measure, it will have to be reconciled with a House version that does not include the Interchange provision.
What does this mean for U.S. merchants? First, take a look at your most recent April merchant statement. If you are not on a direct Interchange pass through pricing plan already then you need to take action. Open your browser and Keyword search "merchant Interchange rate quote".
If the government forces Interchange lower, you will want to immediately and directly benefit. You can't if your merchant rates are billed on a bundled, blended, tiered, or non-qualified surcharge basis. Not only must you insist on Interchange pass through but you must also insist on a month-to-month merchant services agreement and read all of the fine print. Avoid 3-year terms with early termination penalties (a red flag for introductory offers that are unsustainable). If you are going to have terms "waived" then have an attorney review before signing.
Direct Interchange pass-through merchant rates will result in lower processing expenses. With mounting pressure from legislation, litigation and alternative payments, it appears Interchange may be headed lower. All merchants should put themselves in a position to take advantage of these developments.