In Interchange Plus, PIN Debit

The Federal Reserve has been granted the authority to regulate the costs charged by banks for Debit card transactions due to implementation of the Durbin Amendment. The revised cost that the Fed has proposed for Debit transactions is $0.12 per transaction, which is significantly lower than the rates currently charged. For example, Visa – the largest debit card processor through their Interlink network – currently charges 0.95% plus $0.235 per transaction for debit card transactions. The proposed changes are scheduled to go into effect on July 21, 2011, and while the Fed may modify this proposed rate reduction, credit card processors expect a dramatic reduction in the costs for debit card transactions.

Why didn’t I say “merchants” will expect this rate reduction?
This is because the cost reductions may or may not be passed along to you – the business owner. It’s clear that your credit card processors expect to have lower costs, but they may or may not choose to pass along the lower rates.

Most credit card processing accounts have a teaser rate or multi-tiered pricing structure, with different rates for different card types. With this traditional merchant account, debit card rate decreases will NOT be passed along to you the business owner because the rates that you pay are fixed. So when debit card costs shrink, the rate your business is paying is not automatically reduced, you’ll have to request a rate review and hope for a cost reduction.
But if you’re a Leap Payments client all cost reductions WILL be passed through to you immediately without any action required. This is because Leap Payments provides interchange pass through accounts so reductions in interchange rates or costs are passed through to your business immediately. We say bring on the cost reductions, our clients can use the savings!

What if you don’t have an interchange pass through account?
Most credit card processors don’t offer interchange pass through, so it’s expected that the credit card processor will keep all the savings to themselves. Let’s be honest, most credit card processors are greedy and don’t miss any opportunity to increase your rates or retain your savings. The only way you can be confident that cost savings are immediately shared with your business is to have a true pass-through account offered by Leap Payments.

Our philosophy:
You’ve graduated to a higher level of service with Leap Payments and you will receive every cost reduction immediately and without asking. With Leap Payments you get the personal service you deserve and the savings are automatic, don’t settle for anything less.

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