Among the many affects of the law is a cap on “swipe fees.” These are the interchange rates that merchants must pay the banks that manage the electronic payment networks for credit card and debit card transactions. For years gas stations and most retail merchants complained, rightly so, that the swipe fees were too high and that they kept rising, with no end in sight.

Illinois Senator Dick Durbin added an amendment to the financial overhaul legislation which directs the Federal Reserve to issue rules to ensure that debit card swipe fees are reasonable and proportional to the processing costs incurred. Right now Visa and MasterCard charge debit swipe fees of around 1 percent to 2 percent of the transaction amount — among the highest rates in the industrialized world. The Durbin Amendment, as it became known as, did not address credit card swipe fees, which are higher than debit card swipe fees and will likely remain so.

The new law also prevents card processing networks from forcing transactions to be run on only one card network. By giving merchants the option to run on more than one network, the hope is that competition will keep interchange rates down. Merchants can now also decline to allow a consumer to use a credit card for small transactions (say less than $10) where the interchange fee would represent too great a percentage of the overall purchase. This means that stores and gas stations can offer discounts to buyers who use cash or a debit card over a credit card, or conversely charge a fee to credit card holders to cover their higher swipe fee costs.

So, the bottom line is that lower swipe fees are good for the consumer. Banks, however, lobbied hard but failed to protect the fat profits they have made by continually raising interchange fees to merchants.