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Nearly a decade after promulgation of Regulation II better known as the Durbin Amendment the Federal Reserve Board proposed changes to modernize the regulation by clarifying that the exclusivity prohibition applies to card-not-present transactions, such as online purchases.
On March 7, the Federal Reserve Board issued a notice of proposed rulemaking (NPR) requiring debit card issuers to provide at least two unaffiliated networks to process card-not-present debit card transactions. As drafted, the NPR would amend Regulation II (Debit Card Interchange Fees and Routing), promulgated under Section 1075 of the Dodd Frank Wall Street Reform and Consumer Protection Act, which amended the Electronic Funds Transfer Act to add a new Section 920 regarding interchange transaction fees for electronic debit transactions and rules for payment card transactions.
REGULATORY DEVELOPMENTS
FEDERAL RESERVE SEEKS COMMENT ON PROPOSED CHANGES TO DURBIN AMENDMENT
On May 7, the Federal Reserve issued a Notice of Proposed Rulemaking inviting public comment on proposed changes to Regulation II (Debit Card Interchange Fees and Routing), better known as the Durbin Amendment. The proposal clarifies that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks (for example, a PIN debit and a signature debit network) for card-not-present debit card transactions, such as online purchases. In the proposal, the Federal Reserve indicated that it views these clarifications as necessary in light of information indicating that often only one network is enabled for such transactions. However, banking trade associations warned that the proposal would make it harder for banks to deliver low transaction prices to acquirers and consumers and threatened to stifle innovation, including security protections, in the payments
Federal Reserve Board Invites Public Comment On Proposed Changes To Regulation II Regarding Network Availability For Card-Not-Present Debit Card Transactions And Publishes A Biennial Report Containing Summary Information On Debit Card Transactions In 2019 Date
07/05/2021
The Federal Reserve Board on Friday invited public comment on proposed changes to Regulation II (Debit Card Interchange Fees and Routing) to clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases. The Board views these clarifications of Regulation II s existing requirements as necessary in light of information indicating that often only one network is enabled for such transactions.
Date Time
Federal Reserve Board invites public comment on proposed changes to Regulation II regarding network availability
The Federal Reserve Board on Friday invited public comment on proposed changes to Regulation II (Debit Card Interchange Fees and Routing) to clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases. The Board views these clarifications of Regulation II’s existing requirements as necessary in light of information indicating that often only one network is enabled for such transactions.
Additionally, the Board published today a biennial report containing summary information on debit card transactions in 2019.