Credit card reforms begin this week
President Barack Obama signed financial reform legislation Wednesday that will promote fairer credit card practices and lower interchange fees for debit card purchases. The legislation is a victory for the restaurant industry and the National Restaurant Association, which worked for years to secure interchange fee reform. The legislation authorizes the Federal Reserve to issue regulations that ensure interchange fees on debit card transactions are "reasonable and proportional" to the costs of processing transactions. It also allows merchants to set a minimum level for credit card transactions. Merchants will be able to give discounts for cash, checks and debit cards. NRA members who responded to an Association Action Alert helped convince many previously undecided senators to support the bill.
Effective today:
- Merchants can set minimum amounts for credit card usage as long as the minimum does not exceed $10 per transaction. Also, merchants cannot differentiate between bank issuers or card networks.
- Merchants can offer customers discounts for payment made with cash, checks, debit cards or credit cards, as long as the discount is offered to all customers and is clearly disclosed to the extent required by federal and applicable state law. In the case of discounts for debit or credit card payments, merchants cannot differentiate between bank issuers or card networks.
Effective July 2011:
- The Federal Reserve has until April 2011 to issue regulations to ensure that interchange fees on debit card transactions are reasonable and proportionate to the cost incurred by the card issuer with respect to the transaction. The regulations will become effective in July 2011. The NRA, working within the Merchants Payment Coalition, will provide guidance to the Federal Reserve to ensure the best possible outcome for the regulations, which will significantly reduce interchange fees on debit card transactions.