Swipe Law Signed

Interchange reform has begun.
The Wall Street Reform & Consumer Protection Act has been signed by President Obama and its a matter of time until the its reforms are implemented.

Specifically, when will the language governing transaction limits and "reasonable and proportional" rates be implemented?

http://www.cspnet.com/ME2/Audiences/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=E3F517AE55D14193854E0D607130083B&AudID=7763DA803CBE410A893CD5C4ED7C9205

Retail groups praised Congress for passing and President Barack Obama for signing into law the Wall Street Reform & Consumer Protection Act (H.R. 4173, also known as the Dodd-Frank Wall Street Reform Act of 2010), which includes a provision to reform credit-card and debit-card interchange fees. The bill includes an amendment sponsored by Senate Majority Whip Richard Durbin (D-Ill.) that would require the Federal Reserve to set regulations resulting in "reasonable and proportional" swipe fees for debit cards.

Colloquy Blog - Possible outcomes of the Durbin Amendment

While I've been a proponent of sensible regulation, I'll admit that there's some reservations I've had about the subject. I found a blog recently that address at some of these concerns.

• What effect will debit interchange regulation and the other aspects of the Amendment have on consumers?
• How will it impact card issuers who are striving to build cardholder loyalty and regular usage of their payment products?

http://blog.colloquy.com/2010/07/19/the-durbin-effect-–-which-path-will-the-industry-take/

Limiting payment flexibility: In addition to mandating that the Federal Reserve regulate debit card interchange rates so that they are “reasonable and proportional”, the Amendment would also allow retailers to set minimum purchase amounts of up to $10 before accepting electronic payments. The idea of reduced-payment-options-equals-more-choice is, of course, a contradiction of terms. If consumers start to find that they can’t use their credit card for small purchases at a convenience store or drug store, is that in their best interests?

Effect on debit card rewards programs: if the model of regulated interchange in Australia is any indication, some card issuers may start to cut back on the generosity of their rewards programs if the Federal Reserve chooses to lower interchange rates. In fact, in Australia, there was an average decrease in rewards program earn velocities of 23%.

Introduction of annual fees: a related issue that may impact consumers is that some issuers may find that adding an annual fee to the debit card rewards programs is necessary. Again, in Australia, many issuers did just that and increased fees by as much as 47% to 77%.

Eventual impact on other electronic payment options? Regulating interchange on debit transactions now could mean that Congress will attempt to regulate interchange for credit-card transactions later. If that were to take hold, these same impacts could affect consumers for the general purpose credit cards and retail co-brand credit cards they earn rewards on today.

Superhuman

Its off topic...yet the concept of swipe fees takes a little while for some people...smart people, like business owners to understand.

Infographic by Smarter.org

Praise for Key Republican Leaders from the President

As the Restoring American Financial Stability Act of 2010 goes to the President's desk, he acknowledged three leaders from the GOP that broke ranks to support reform, that which includes the Durbin amendment governing debit card fees.

http://www.nacsonline.com/NACS/News/Daily/Pages/ND0714101.aspx

Yesterday President Obama praised three GOP senators for supporting the financial regulatory overhaul bill conference report: Senators Olympia Snowe (ME), Susan Collins (ME) and Scott Brown (MA). Their crucial support means that the Senate has secured the necessary votes to streamline final passage and block a filibuster attempt.

Congressional Quarterly reports that Obama commented, "Three Republican senators have put politics and partisanship aside to support this reform. And I am grateful for their decision, as well as all the Democrats who have worked so hard to make this reform a reality.”

"This reform is good for families; it's good for businesses; it's good for the entire economy," Obama said.

WTF - Swipe Fees?!!?

I've been scanning through Reddit lately...and this posting, as well as the discussion is quite interesting..

http://www.reddit.com/r/WTF/comments/coiic/1_way_of_helping_out_ma_pa_stores/

Today I went into a 'Ma & Pa' type of gas station today to buy a pack of smokes. The cashier thanked me for using cash to purchase the product. I said you're welcomed & asked why are you happy that I used cash instead of a debit or credit card.

He informed me that small chains, such as his (gas stations, local stores, etc) are basically getting raped by by 'Card Companies' w/ fees. These companies take 40cents of the profit made from the product sold using debit/credit cards while the more well known companies such as Walmart, Target, Sheetz, etc only have to pay 1% for those types of transactions.

An example he gave me: Say you go into a 'Ma & Pa' type of store & but a $10 pack of beer. He only see's 50cents from that sale. If you use you debit/credit card, the company they deal w/ takes the 40cents, leaving the store w/ a 10cent profit.