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Table of Contents

Lead Story

Expert advice on data security defense and planning

News

Industry Update

Merchant info possibly compromised in breach

Republican senators introduce national data security standard

ATM regs under fire, class action denied, consent decree approved

Durbin one piece of retail puzzle

Features

Research Rundown

Selling Prepaid

Prepaid in brief

Prepaid forums address challenges ahead

The new language of rewards

Views

Lead sources - the front line in sales competition

Marc Abbey and Lacy McDonnell
First Annapolis Consulting

Education

Street SmartsSM:
When you hit the doldrums, start rowing

Jeff Fortney
Clearent LLC

Revving the engines that drive success

Tom Waters
Bank Associates Merchant Services

Is the aggregator model right for you?

Chandan Mukherjee
PayCube Inc.

Be positively different to make your business stand out

Peggy Bekavac Olson

mPOS runs circles around PayPal, Square

Rick Berry
ABC Mobile Pay Inc.

Company Profile

Stream Cash LLC

New Products

A cashless ATM

Retail Teller Machine
KAL

Secure checkout for POS, web or mobile

Mercury HostedCheckout
Mercury Payment Systems LLC

Inspiration

Do you still love me?

Departments

10 Years ago in The Green Sheet

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

July 09, 2012  •  Issue 12:07:01

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Durbin one piece of retail puzzle

The debate continues on whether the Durbin Amendment to the Dodd-Frank Act of 2010 will boost the bottom line for merchants and translate into lower prices for consumers. According to the Merchants Payments Coalition, a strong advocate of debit interchange reform representing member associations that collectively serve about 2.7 million merchant members, the reform is working to bring lower prices to consumers and spur retail sales.

"The reform has worked as intended where it has reduced interchange fees," said Douglas Kantor, Counsel to the MPC and Partner at Steptoe & Johnson LLP. "What we're seeing, where those reductions are, is consumers are saving, business is better and banks, especially exempted banks, have done quite well and haven't had problems." He said many of the claims made by banks that interchange reform would be detrimental simply haven't panned out.

Kantor believes a problem persists because the Federal Reserve's final ruling varied from the proposed rule, which means the original intent of Congress may not have been fully implemented. "There were some problems with the way the Fed wrote the final rule, and so, on some smaller-dollar transactions, there aren't savings and, in some cases, have been increases," he said. "And that's a problem, but it's one that we're hoping the courts sort out."

Home Depot paying it forward

Kantor said that transactions for which interchange fees were reduced have played out as the coalition expected. As an example, the MPC cited The Home Depot U.S.A. Inc., which has publicly stated interchange fees represent the company's third-highest operating cost and that it has reduced prices on over 3,000 products since Oct. 1, 2011, when the Durbin Amendment went into effect.

Stephen Holmes, Senior Manager, Corporate Communications for The Home Depot, said it's essential to keep everything in perspective because you can't draw a straight line from the Durbin Amendment to pricing. "We're lowering prices," Holmes said. "That's a normal part of our process. As a discount retailer, we're taking savings wherever we can get them and using that to give it back to our consumers."

Kantor agreed, stating, "What we have so far is anecdotal evidence. We don't have across-the-board evidence, but the anecdotal evidence you certainly saw for Home Depot, but you've also seen from major retailers, having compressed profit margins, and so that to the extent they're saving anything, it is passing through." Heavy retail discounting over the past several months has been good for everybody, he added.

Looking ahead, it appears the fight is not over yet for MPC and other retail organizations. Merchants continue to be vigilant about reining in operating costs in an economy that has not yet fully regained its footing. "The [debit] interchange fee is just a small component of what is happening," Kantor said. Lowering credit card fees may be next on the agenda for the MPC and similar organizations. About that issue, Kantor said, "We are always working on that effort."

For additional news stories, please visit www.greensheet.com and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

USAePay | Impact Paysystems | Electronic Merchant Systems | Inovio | Board Studios, Inc.