Skip to content

Durbin ruling: Are Retailers Prepared to Take on Newfound Control over their Payment Routing?

Most of the industry is concerned with the interchange element of the ruling...who will or will not benefit from the interchange reduction. Is it the financial institution?  The retailer? The consumer?

From a retailer perspective, its obviously favorable toward them. However, there is a part of the ruling that should not be overlooked that will have a great deal of long term impact on retailers and their payment systems:
 
Judge Richard Leon said,  "...And failing to provide merchants with multiple unaffiliated networks for each debit card transaction."
 
We interpret “multiple” as many--more than two.  Until the Durbin Amendment ruling, retailers had little control over the way their payments were routed. If what Judge Leon has stated about providing merchants with multiple unaffiliated networks holds true, retailers are going to have more choice and control over how their payments are handled, and where they are being routed to. But are retailers equipped to take on this responsibility?

The existing payment systems have to get more sophisticated in order to make real time decisions with their payment routing. Retailers will need to utilize new techniques like advanced least cost routing, more sophisticated analytics to account for the various payment options, and be able to do so without impacting the consumer experience. We live in a time starved society,and every second counts to the customer. Conversely, every second impacts the bottom line for the retailer. 

Those retailers who are able to capitalize on their newfound flexibility and utilize the additional payment choices will ultimately give them a grasp on the control they have been seeking.

Durbin ruling: Are Retailers Prepared to Take on Newfound Control over their Payment Routing? by Sean Guilfoyle