The latest on the Durbin Amendment
On June 29, 2011, the United States Federal Reserve Board voted to proceed with a plan to execute the legislation enacted into law under the Dodd-Frank Act of 2010. Known as the Durbin Amendment, this legislation will change the landscape of retail payments in the U.S..
Issuers, processors, acquirers, and merchants will all be affected – significantly, in many cases – by the two major changes legislated by the U.S. federal government: changes to debit card interchange fee rates and new policy regarding network exclusivity.
Although the legislation has been known for almost a full year, the details of the legislation have been somewhat ambiguous, and the time line for executing the law into action has been rolled out as a series of milestones, rather than as a fixed date for full adoption of the laws. However, after yesterday’s motion, the U.S. retail payments industry now has clarity on the two major points of the legislation.
First, new debit card interchange fee rates will be capped at 21 USD cents and an ad valorem component of 5 basis points (effective October 1, 2011). An additional fraud prevention adjustment (USD 1 cent) can be earned on each transaction in situations where the issuer performs prescribed actions to detect and prevent fraud.
Network exclusivity compliance will be enforced such that an issuer and payment card network must provide a merchant accepting its debit with two non-affiliated networks, regardless of authorization method, meaning PIN or signature debit (effective October 1, 2011 for card networks and April 1, 2012 for card issuers).
This legislation dramatically changes the retail payments ecosystem in the U.S. No company remains unaffected, and that includes payment solution vendors like ACI Worldwide. We have been tracking this legislation for well over a year and have been working with our customer base and industry experts in the U.S. to understand the impacts of the legislation on their business models. ACI will continue to monitor the interpretations of the legislation and partner with our customers throughout the industry to ensure that our payment solutions will not only comply with the legislated changes in the U.S., but enable issues, processors and merchants to maximize their economic returns from this new landscape for debit card payments.
Related blog posts
Mobile is Transforming the Travel Sector
February in South Africa means long, hot days, and seemingly endless sunshine (interrupted only by the occasional thunderstorm). Temperatures often top 30 Celsius (that’s mid-eighties for my American friends) and nearly every day is deserving of a braai (that’s barbeque for the rest of the world). But I do spare a thought for my colleagues and friends in Boston, New York, Munich and London (amongst others) at this time of year, as they slog it out through the darkest and coldest months of winter. Who’s to blame them for seeking a bit of light escapism as they plan and book their spring and summer vacations?
Connected Devices are Opening Up New Forms of Payments and Partnerships
Of all the trends that are currently shaping – or re-shaping – the nature of payments, none is more significant than the rise of the Internet of Things (IoT). We often talk about the payments ‘ecosystem’ and the complexity that exists between the many participants that are part of this ecosystem, but this complexity will expand exponentially as millions – no, billions – of devices become internet capable.
Busting Bitcoin Myths
Bitcoin has attracted its fair share of media attention – and some negative perceptions held by merchants and consumers are hard to shake. To what extent is this justified? Or are there myths that can be dispelled? Bernard Kaufmann, General Manager, Payment21 contributed the following guest blog post to do some cryptocurrency ‘mythbusting.’
Open API Architecture is Now a Prerequisite for Merchants
Next generation merchants, including global players such as Uber and Airbnb, have built their success on openly accessible APIs and technologies that are constantly evolving to meet market needs. Because they have built their products and services on openness, they also expect an open technical setup from their payment providers. This puts pressure on payment providers to deliver state-of-the-art payment technology.
Peak Trading Is About More Than Black Friday And Cyber Monday
Many merchants will have now experienced their biggest single trading day of the year, either Black Friday or Cyber Monday, and alongside these peak trading days have focused their efforts on effective fraud managements and delivering a seamless and secure checkout experience. However, this is not universally the peak for all merchants.
Analyzing Annoyance Online Shopping Behavior at the Checkout
If you’re standing at the checkout in a brick-and-mortar store, it’s easy enough to see when fellow customers become agitated and annoyed. Impatiently checking the time, audible ‘harrumphs’ and negative body language are all tell-tale signs that the payment process is not proceeding as smoothly as desired. But how does this frustration manifest itself in online shopping behavior?
Connecting European Merchants and Chinese Shoppers via Alipay
Despite its size and reach, Alipay is still an emerging player outside its home country, China. Launched in 2004 as part of the Alibaba Group, its e-wallet is the world’s leading third party payment platform. Part of its success stems from the fact it is embedded in many of the Alibaba Group’s merchant services; including Taobao, an online consumer-to-consumer shopping platform; AliExpress, an online retail service for small Chinese merchants selling outside China; and TMall, an online platform for global brands selling to affluent Chinese shoppers.
Risky Business? Open Invoice Payments In Germany
PayProtect is used by merchants and payment service providers to manage the risk around 'purchase on account' – a payment method that is a must when operating in the large German eCommerce marketplace. Jens Kühle, MD of GPP, a company of the GFKL-Lowell Group, sat down with us to explain the specifics of eCommerce risk management in the German market.
Defining 'Openness' in the Context of eCommerce Payments
Open payments is a relatively new idea that lacks an agreed-upon definition within the payments industry. The “Openness” trend emerged from outside the industry, but disruptors and forward-thinking established players have brought it to the fore in payments.
China Singles Day Does It Have Legs
Black Friday and Cyber Monday are just around the corner, and while sales are likely to exceed the records set in 2014, what is certain is that the biggest single day of the year for eCommerce will once again be China Singles Day. Alibaba reported USD $14.3 billion in online sales on 11.11 in 2015, a 60% increase on the same day in 2014. In fact, the previous year’s total of USD $9.3 billion was eclipsed within 14 hours of trading, so Alibaba beat its own record without so much as breaking a sweat.