Digital Transactions reports that Tempo Payments Inc., a leading company in the decoupled debit card niche, is going out of business, blaming the Federal Reserve Board’s new debit card regulations. The company claims the new rules will cut its revenues in half.
“We are a casualty of the Durbin Amendment,” said Mike Grossman, chief executive, Tempo Payments Inc. “It’s very frustrating. We were clearly on a path to significant success.”
The Fed's final rule on June 29 sets debit interchange fees at 21 cents plus five basis points of the sale. According to Grossman, Tempo currently gets 44 cents in gross revenues per transaction.
San Mateo, Calif.-based Tempo has eight merchant partners that offer their customers rewards debit cards branded with the Discover or MasterCard network logos.
Grossman said the company has laid off 15 of its 25 employees, and the rest will be let go in the next few months.
“When you impose price controls, a lot of things happen,” Grossman said.
The Durbin Amendment exempts debit card issuers with less than $10 billion in assets. According to the article, Tempo’s main issuing partner is Brookings, S.D.-based First Bank & Trust, and although First Bank and Trust has only $812 million in assets, the Fed did not exempt decoupled debit cards whose transactions are routed over payment card networks.
