Federal Reserve Board's Final Rule Implementing The "Durbin Interchange Amendment" To The Dodd–Frank Act

On October 1, 2011 a new Federal Reserve Board Final Rule implementing the "Durbin Interchange Amendment" to the Dodd-Frank Act will go into effect. The amendment mandates that any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction (EDT) must be "reasonable" and "proportional" to the cost incurred by the issuer with respect to the transaction. The Board's final rule sets the interchange fee at 21 cents, an increase over its initial proposal of 12 cents. In addition to the reduction of interchange fees, the amendment also gives merchants more control over costs by requiring debit cards to have at least two partner processors, which permits merchants to opt for the least expensive. While some have expressed concerns that the savings created by the amendment do not automatically benefit merchants (not to mention consumers), the new rule marks a significant policy shift in a direction that retailers have