Credit Card Processing Fees: A Summary of Landmark Decisions that Changed the Game for Dealerships

There’s a lot that factors into bank card processing fees, more than can be covered here in a single article. For the most part though, any processing fees you’ll pay as a dealer will be in the form of interchange fees, also known as swipe fees. These cover necessary functions including handling, fraud assessment, and digital communications between the point-of-sale, the issuing bank, and the acquiring bank. Interchange fees in and of themselves have a host of factors influencing final cost, and vary based on their card network, issuing bank, and specific card’s policy. Debate centered around bank card fees have taken place in and out of the courts for decades, but several recent landmark decisions have changed how card issuers impose interchange rates, policies that affect consumer bank card use, and how merchants can pass along the cost incurred by accepting bank cards to the customer. 

The Durbin Amendment 

The catalyst for this change originates in an amendment made in 2010 known colloquially as the Durbin Amendment. To summarize, the Durbin Amendment refers to a section of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act specifically aimed at reigning in runaway debit card transaction fees imposed on merchants by banking institutions. Upon its passage, a hard cap was established that limited the maximum amount card issuers could charge for interchange. However, this only covered debit card transactions and not credit cards. As a result, banking institutions began to offer favorable policies and rewards programs for credit accounts, and removed these policies and rewards from standard debit accounts. This led to a slowly increasing percentage of United States point-of-sale payments being made by credit card, recorded most recently as 38% of total transactions made in the year 2020.

Expressions Hair v. Schneiderman 

With credit card transactions on the rise, state legislation concerning credit card fees, specifically surrounding surcharging, became a hotly debated topic among merchant coalitions. This came to a head in 2017, when a New York district court civil case was reviewed by the United States Supreme Court. At the time, most states had laws that prohibited merchants from imposing a surcharge to credit card transactions, however, they did not prohibit applying a discount to cash payments. Fundamentally, the difference between a surcharge on credit and a discount on cash is economically equivalent, and so state laws technically regulated how the price difference was communicated rather than the price itself. The Supreme Court held in Expressions Hair Design v. Schneiderman that this violated the First Amendment, and so remanded to the lower courts. 

Following this landmark decision, many states followed suit in appealing standing surcharge laws on the grounds that they violated free speech. Simultaneously, pending litigation against major credit card issuers made significant breakthroughs, further strengthening the negative perception of swipe fees. As of September, 2021, there are only 2 states that uphold credit card surcharge bans, meaning the vast majority of merchants can now apply a surcharge if they desire. What does this mean for automotive dealers? In an age where electronic transfer makes up well over half of the total purchases made in the US, having a merchant service provider who can help you maximize these benefits is important. Dealer Merchant Services (DMS) is committed to exactly that: bringing you a custom program that cuts expenses and drops hidden fees. Using a proprietary hybrid processing model, DMS can save you up to 75% on bank card transaction fees. That’s tens—if not hundreds—of thousands of dollars a year! 

Not convinced? Contact us on our website or at to get your free cash-savings analysis and see exactly how much you’ll save! Just send us two to three months’ worth of merchant statements, and we’ll respond with a 15-minute review at no charge to you. 

Dealer Merchant Services

We have a proprietary solution to help dealers save up to 75% of their credit card processing fees without disrupting CSI