The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), passed Congress on July 15. The bill now heads to President Obama for signature, which is expected the week of July 19.
One important provision for garden retailers and other green industry businesses accepting credit and debit cards survived the debate intact. The final conference report contains the so-called Durbin Amendment relating to interchange fees, which attempts to bring relief from the fast upward spiral of these fees. In summary, the provisions of the amendment accomplish the following:
Federal Reserve authority. The Federal Reserve is charged with issuing new regulations within nine months of enactment, and taking effect three months thereafter, on whether debit card interchange rates are “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.”
Discounting. Credit card companies are prohibited from restricting the ability of businesses to offer discounts for payments made by cash, checks, debit cards or credit cards. However, discounts may not differentiate between card issuers or card networks.
Minimums. Businesses are permitted to set a minimum transaction amount of up to $10 for credit card transactions, with authority given to the Federal Reserve to increase this amount.
Network fees. Network fees charged by credit card companies to businesses are exempted from the Fed regulations. The Federal Reserve, however, is given authority to ensure that a network does not attempt to circumvent the intent of the new regulations by creating new fees to compensate issuers, directly or indirectly, for debit card transactions. As part of the rulemaking, the Federal Reserve is to consider the functional similarity between debit transactions and checks, which clear at par, and the incremental cost incurred by the issuer in the authorization, clearance or settlement of transactions.
Fraud adjustment. The Federal Reserve is given authority to adjust upward debit card interchange rates on a per issuer basis if the issuer takes steps to reduce fraud, including through implementation of cost-effective fraud prevention technology.
Exemption. Banks, credit unions and thrifts with assets of less than $10 billion (not adjusted for inflation) are exempted from the Fed regulations. Debit cards and general-use prepaid cards issued by federal, state, or local government-administered payment programs are exempted from the Federal Reserve regulations, as are all reloadable prepaid cards not tied to an individual’s demand deposit account.
Exclusivity arrangements. One year after enactment, the Federal Reserve is charged with prescribing rules to ensure that payment card networks must provide businesses with at least two network “bugs” with which to route transactions. The regulations are also required to prohibit networks from erecting routing restrictions. This so-called multi-bug provision was added to the bill through the agreement reached by conferees.
American Nursery & Landscape Association worked in close collaboration with the Retail Industry Leaders Association and others to advance and protect this important amendment.
“ANLA and especially our leading garden retailers join in thanking Senator Durbin and other supporters of the interchange fee amendment for their perseverance,” said Craig Regelbrugge, ANLA’s vice president for government relations.