Toughey Talks
Durbin Debit Reform
Durbin Debit Decisions
July 28, 2011
The race is on to take advantage of new debit card interchange rates effective October 1st. As we discussed during our Special Edition TouchNet LIVE! on July 14th, (click here to view a 10-minute executive summary), the Federal Reserve Board has defined new debit interchange rates in response to the Wall Street Reform Act of 2010 and its "Durbin Amendment." Now the big question is…What financial impact will Durbin have on your campus payments?
Your answer will depend upon your preferences for accepting tuition credit/debit card payments.
| Accept Credit/Debit Cards | (About 25% of institutions) |
|---|---|
| Current Card Strategy: | Accept both debit and credit cards. Underwrite discount fees as necessary cost of doing business. |
| Durbin Opportunity: | Chance to lower the cost of accepting payment cards. Make sure lower debit interchange is "passed through" in a new campus discount fee. |
| Durbin Action: | Dust off current merchant agreements. Negotiate for lower discount fees. Beware of rising credit card interchange rates in near future. |
| Do Not Accept Cards | (About 25% of institutions) |
|---|---|
| Current Card Strategy: | Eliminate payment card merchant costs entirely. Route credit card tuition payments to a Convenience Fee Service (where permissible*). |
| Durbin Opportunity: | Lower debit card fees give you the option to accept debit card transactions at campus pay points, including the Visa brand. |
| Durbin Action: | Expand campus payment technology to support debit cards. Negotiate with merchant service provider to get lowest discount rate possible. |
| Accept Credit/Debit Cards, But Considering a Change | (About 50% of institutions) |
|---|---|
| Current Card Strategy: | Accept debit and credit cards. Understand that cost of accepting payment cards is growing each year, so continue discussions about a move to a convenience fee model. |
| Durbin Opportunity: | Durbin reform provides the best opportunity in years to reduce overall cost of processing payments. Consider offering debit card option on campus and moving credit card payments to a Convenience Fee Service.* |
| Durbin Action: | Take action; now is the right time. |
*Make sure your state laws do not prohibit use of convenience fees.
No matter which group you’re in, Durbin reform offers you new opportunities. However, it’s important to understand that the cost of processing credit card payments will likely increase in the coming years to help offset lower debit card fees. So, if you’ve been thinking about changing your payment card acceptance strategy, don’t delay. Now is the right time to make a change.
Lets get it done.
Dan Toughey
dan2e@touchnet.com
Toughey Talks
Durbin Debit Reform
Durbin Debit Decisions
July 28, 2011
The race is on to take advantage of new debit card interchange rates effective October 1st. As we discussed during our Special Edition TouchNet LIVE! on July 14th, (click here to view a 10-minute executive summary), the Federal Reserve Board has defined new debit interchange rates in response to the Wall Street Reform Act of 2010 and its "Durbin Amendment." Now the big question is…What financial impact will Durbin have on your campus payments?
Your answer will depend upon your preferences for accepting tuition credit/debit card payments.
| Accept Credit/Debit Cards | (About 25% of institutions) |
|---|---|
| Current Card Strategy: | Accept both debit and credit cards. Underwrite discount fees as necessary cost of doing business. |
| Durbin Opportunity: | Chance to lower the cost of accepting payment cards. Make sure lower debit interchange is "passed through" in a new campus discount fee. |
| Durbin Action: | Dust off current merchant agreements. Negotiate for lower discount fees. Beware of rising credit card interchange rates in near future. |
| Do Not Accept Cards | (About 25% of institutions) |
|---|---|
| Current Card Strategy: | Eliminate payment card merchant costs entirely. Route credit card tuition payments to a Convenience Fee Service (where permissible*). |
| Durbin Opportunity: | Lower debit card fees give you the option to accept debit card transactions at campus pay points, including the Visa brand. |
| Durbin Action: | Expand campus payment technology to support debit cards. Negotiate with merchant service provider to get lowest discount rate possible. |
| Accept Credit/Debit Cards, But Considering a Change | (About 50% of institutions) |
|---|---|
| Current Card Strategy: | Accept debit and credit cards. Understand that cost of accepting payment cards is growing each year, so continue discussions about a move to a convenience fee model. |
| Durbin Opportunity: | Durbin reform provides the best opportunity in years to reduce overall cost of processing payments. Consider offering debit card option on campus and moving credit card payments to a Convenience Fee Service.* |
| Durbin Action: | Take action; now is the right time. |
*Make sure your state laws do not prohibit use of convenience fees.
No matter which group you’re in, Durbin reform offers you new opportunities. However, it’s important to understand that the cost of processing credit card payments will likely increase in the coming years to help offset lower debit card fees. So, if you’ve been thinking about changing your payment card acceptance strategy, don’t delay. Now is the right time to make a change.
Lets get it done.
Dan Toughey
dan2e@touchnet.com