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Monday, May 9, 2011


OK, I know I do a fair amount of blogging about personal development, but as a business coach, I am not just concerned with the health of the individual but the health of small business.

I know it is a dry subject (for many) but this is an important subject -- especially for the small business owner.

There is a lot of concern about how the Durbin Amendment will hurt banks and speculation that consumers will pay the price when this legislation goes into effect.

If you haven't heard about the Durbin Amendment, you should take note because it will create a cap of 7 to 12 cents on most debit card swipe fees. This is a decline of about 80% of what businesses had to pay when people paid with a debit card. Projections from analysts vary but say that the Durbin Amendment will cost banks anywhere from $3.6 to $9.1 billion. Either way you cut it that is a lot of money. Speculation has it that banks and credit unions will make up for this lost revenue by raising fees for services or doing away will debit cards all together. (You can learn more about the Durbin Amendment here: http://www.nerdwallet.com/blog/2011/durbin-amendment-explained/).

One would expect that businesses would save money through this proposition and that this will eventually trickle down to the person buying a loaf of bread with their debit card. In theory (based on an assumption that business owners will pass this on to consumers).

But there is another assumption that you don't see in all the hoopla about the Durbin Amendment: in order for all of this to work, credit card processors (the intermediaries between businesses and their banks) need to pass this savings on to the businesses themselves (essentially their customers). Unfortunately, many credit card processors pocket the savings and present business owners with statements that are so complex you need a Ph.D. in accounting to even begin to figure them out. Heartland Payment Systems seems to be the only credit card intermediary that cares enough about businesses to not only be straight up with them about how much they are making on their service but cares enough to pass on savings they get to their customers (business owners) which in turn benefits us all.

So if you own a business, make sure you take a look at your statements in the coming months and see if your payment processor is being honest with you.

(A good way to test this is to apply, what Heartland Payment Systems calls, the "Truth Serum" to your credit card processor; it's a page of questions to ask you payment provider to get them to tell you what they really are charging you; email Todd Vreeland, a colleague I have great confidence in; he can get you a copy).

What do you think of the Durbin Amendment? As a business owner is it easy to know what you pay for processing fees?

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