Congress Passes Financial Reform Package Members, Thank you for your grassroots efforts on the Durbin amendment, which was included in the Wall Street Reform and Consumer Protection Act. This legislation was signed into law by President Obama yesterday. Provisions of the new law will allow the Federal Reserve to issue standards related to debit interchange fees no later than 9 months after this legislation is enacted into law. Below is a summary of the specific provisions that were included in the amendment as passed by the U.S. House and Senate:   Effective Immediately Merchants will now able to set a minimum transaction amount of $10.00 for credit card transactions. Please note that transaction minimums are not permitted for debit, SNAP, or other government issued cards. The Federal Reserve Board does have the authority to increase this dollar amount. Merchants will now have the ability to offer customers discounts for a different form of payment such as cash, checks or debit cards without penalty from the card issuing network. However, the merchant may not give an incentive to the customer to use one issuing bank or payment card network over the other. The "Honor All Cards" rule still remains in effect. Effective No Later Than 9 months After Enactment Debit Interchange Fees Must be "Reasonable and Proportional" The Federal Reserve Board must issue regulations that establish standards to ensure debit interchange fees are reasonable and proportional to the cost incurred by the card issuer. There are numerous factors that will be considered by the Board, some of which include the processing similarities between debit and checking and the costs incurred by the issuer such as the cost of authorization, settlement and clearance. Federal, State or local government payment card programs are EXEMPT from this regulation, as well as pre-paid cards. Issuing banks will lose this exemption if after the two year grace period the cardholder is charged an overdraft fee or fees for their first monthly ATM withdrawal. Fraud Standards Card issuers may petition the Federal Reserve Board for an adjustment to the debit interchange rate if the adjustment pertains to fraud related reasons. The card issuing bank would then have to prove that they are taking effective steps to reduce fraud and are meeting all fraud related standards set by the Board. The adjustment therefore would be limited to cover prevention costs incurred by the bank. In issuing fraud related standards the Board shall consider a number of factors such as how much electronic debit fraud occurs, types of debit transactions associated with fraud, the available means to reduce fraud, who bears the cost of fraud prevention and fraudulent transactions, and the extent to which interchange fees in the past have reduced or created incentives to reduce fraud. Effective No Later Than a Year after Enactment Exclusivity Agreement The card issuer would be prohibited from requiring their debit cards to be exclusively processed on one debit network, or two networks that are affiliated with each other. The Board will also restrict networks from establishing routing restrictions.   Additional summaries are provided from our good friends at RILA: Section by Section of the Amendment Summary of the Amendment Section 1076 of the Conference Report (Durbin amendment language)   As always, if you have any questions, please feel free to contact me by email or at (850) 222-4082.