June 21, 2011
The Federal Reserve has scheduled a meeting for next Wednesday, June 29, to discuss plans regarding new debit card interchange fee regulation, according to a meeting notice on their website.
“The Fed, at the June 29 meeting, is expected to issue final rules that would rein in the debit card swipe fees, also known as interchange fees, that banks charge retailers every time a consumer swipes a card at the register to make a purchase,” reports Dow Jones.
The Fed missed the initial April deadline for finishing debit swipe fee guidelines as mandated by the Dodd-Frank financial overhaul bill.
The Fed has proposed two alternatives to debit interchange fee regulation. Both would set a maximum of 12 cents per transaction for debit cards with no apparent distinction between signature and PIN. Under one proposal, there would be a safe harbor of 7 cents, and issuers could make a case for up to 12 cents based on their actual average variable cost of authorization, clearing and settlement. Under the other proposal, issuers would have a cap of 12 cents per transaction.
The Fed also has two proposals for the number of networks issuers have to offer on their debit cards. They are looking for comments on whether it should be two independent PIN and signature networks, or whether there should be at least two independent PIN networks and two independent signature networks.
Earlier this year, Federal Reserve Chairman Ben Bernanke told lawmakers that there was “reason to be concerned” that the debit interchange exemption for smaller financial instructions wouldn’t be effective and may even result in bank failures.
Click here for full PYMNTS.com coverage of the debit interchange debate.
Analysis on Defeat of Tester Amendment: Industry Now Awaits Final Rule
ABA Urges Fed to Revise Rule on Debit Card Interchange
TCF Bank: Debit Caps Should Be Delayed until after Outcome of Suit
Senate Rejects Bill to Postpone Implementation of Debit Interchange Caps
The Durbin Amendment: Myth vs. Reality
Risk Management Could Go Out the Window if Durbin Amendment Prevails
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More