Last month, the final phase of the Credit Card Accountability, Responsibility and Disclosure Act took effect. While most aspects of the CARD Act were launched back in February, Sunday’s additions include credit card fee protections, rate increase warnings, and penalty fee regulations.

These are all important steps towards consumer protection, but what does credit card reform mean for small businesses?

In 2009, merchants paid tens of billions of dollars in processing fees to banks and credit companies. This often forced merchants to raise prices to their consumers in order to mitigate the effect of the fees. Historically, these processing fees have been controlled by banks and credit card companies, who argue that it’s a fair price to pay to securely process transactions. Merchants, however, have experienced diminishing bottom lines as a direct result of interchange (or “swipe”) fees and other processing costs.

As part of this year’s credit card reform, Washington has decided to regulate swipe fees assessed to merchants. The Federal Reserve has been tasked with establishing rates that are “reasonable and proportional” to processing costs, which should be complete by early 2011. Merchants should expect lower, steady rates that are monitored by the Fed. This is a big win for businesses and consumers alike, as credit card companies and banks will be forced to reign in excess fees on transactions.

Consequences of interchange fee regulation could come in the form of new fees from banks to consumers in an effort to offset some of their losses. Consumers and business cardholders should keep an eye out for introductions of new fees and increases in existing fees.

For more information on credit card rules and regulations, please visit the Federal Reserve website

Matt Rushing

Matt Rushing

My name is Matt Rushing and I joined the PaySimple team at the beginning of 2010. In 8th grade, a career test forecasted that I would go on to become a cheese maker, but that has yet to come to fruition. Until it does, I assume I’ll continue my career in Marketing. Having lived in Colorado for 75 percent of my life, I think I’m as close as it gets to “native” status. When I’m not at work, I enjoy golf, skiing, writing and spectator-sporting. You can find him on

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