Durbin Amendment in effect 10/1/11 capping debit interchange rates. Banks and merchants respond by increasing customer fees

On June 29, 2011, the Fed announced the final regulation on the Durbin Amendment which went into effect on October 1, 2011. This final regulation caps interchange fees at $.21 per transaction plus 5 basis points for both PIN based and signature debit transactions for banks with over $10 billion in assets. Any institution with less than $10 billion in assets are exempt from the cap. More than 70% of the debit cards issued in the US are from banks with over $10 billion in assets which means merchants will see this cap in 70% of debit transactions.