Posts Tagged ‘credit card minimums’

How will the new financial overhaul bill affect credit card processing?

Thursday, July 15th, 2010
6. Lower minimums for credit card purchases at stores
Say you walk into a gas station and pick up some soda, candy, and gum. The total is $11, but there’s a sign at the register saying you can only pay by credit card if the purchase is $20 or more. Under the new legislation, the minimum can be no more than $10, and only the Federal Reserve can raise it.
As many of you may have heard – the senate and congress have finally come to agreement on a financial regulation bill.  When the bill was initially drafted there was much concern in our industry that we would be fully regulated.  After they have chopped up their bill this fear has waned and at the end of the day we will see the following changes:
1.  Lower minimums for credit card purchases at stores
After years of not being allowed to do so – it will be legal for businesses to have a minimum charge amount  on a credit card. Under the new legislation, the minimum can be no more than $10, and only the Federal Reserve can raise it.
Many businesses with a lower average ticket have been enforcing minimums for years – now they will be able to do it legally – and for now, it can be no lower than $10.
2.  Limits on debit card fees
The Federal Reserve will have the power to limit the fees that card issuers can collect on debit-card transactions.   ( The interchange portion of the transaction that is kept by the issuing bank – NOT the transaction fee charged by the ISO)   Stores and restaurants say lower fees would allow them to cut prices, and to hire more people. But even if prices do fall at the store, banks might raise fees and rates for their customers. They could also scale back “reward” cards or free checking to make up for the money they’ll lose from stores and restaurants.
At the end of the day our industry will not see any massive changes in the pricing of accounts.  We will see a reduction in debit card interchange – which will be positive for businesses and for those clients still on a tiered rate structure , will create a great opportunity for savings by switching to interchange plus pricing,