The Durbin Amendment for Online Business Merchant Account Members

Oct 07, 2013

Introduced by Senator Durbin in the Consumer Protection Act of 2010, it sparked a fight that has been ongoing now for almost three years. When one good thing happens, the other side- known as the credit card industry- seems to counteract whatever is done, and continues to send the costs right on down to the consumer.

What it was supposed to do

Before the Durbin Amendment, all merchant accounts, especially the high-risk merchant services, were paying a whopping 44% of their fees to Visa, Mastercard, Discover, and American Express. With those extra fees, the banks were offering free checking and rewards programs. With extra money coming in like that, it was easy for them.

When the Durbin Amendment went into effect, those fees dropped from 44% all the way down to a 1-3% margin. It crimped the style of the banks and no longer could they give out free checking and the rewards programs went away. But still, the trickle-down effect continued. The extra fee losses were given to the consumers in new fees from each transaction.

The ‘as promised’ lower costs for the consumers from the retailers did not happen, and extra costs were given to the consumer. Although percentages for the merchant accounts were lowered for the fees, banks that have $10 billion in assets, are capped at paying twelve cents for their transaction fees.

The extra effects

Debit cards are supposed to have the lowest interchange fees, while high-limit signature reward cards have the highest interchange fees. With a card, not present transactions have higher fees, and the PIN present has lower fees. Larger retailers have always had the advantage of negotiating for lower fees, while small businesses like gas stations or restaurants and mom-and-pop grocery stores have not. They are subject to whatever the card owners decide to give to them for fees.


At first, it may have appeared to have won some ground for the little guy, but with the power that the credit card companies have, the only difference was how long it took them to get creative and put OTHER fees into action to replace the ones they had before.

It was a good idea that the Durbin Amendment, but it only served to ruffle feathers, and in the long run will cost the consumers more and more. What probably will continue to happen is the big credit card companies will take the government on. Their pockets are a lot deeper, and their time is well spent trying to get more income for their companies. But, the little guy, also known as the consumer, will suffer from the extra fees that will begin showing on their bills. The merchant accounts will suffer and the business that is small will suffer. In the long run, it all trickles down to the people that can’t afford it to begin with. So, really what did the Durbin Amendment really accomplish? We may never really know, for all the other things it created will cover up all the good.

For more information, contact us today at 818-621-4893.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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