Thursday, February 3, 2011
In December 2010, the Federal Reserve released its draft proposal for debit interchange rules under the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed rules would cap debit card interchange at no more than 12 cents per transaction for issuers that have assets of $10 billion or more.
The Fed interchange rules also contain two alternative proposals prohibiting network exclusivity. Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant’s ability to direct the routing of an electronic debit transaction over any network that may process such transactions.
A 60-day public comment period ends on Feb. 22, and the new rules are scheduled to take effect July 21, 2011. Mary Bennett, Director of Government and Industry Relations for the Electronic Transactions Association, isn't surprised that the Fed's proposed interchange rules are on the list of topics tentatively scheduled for discussion during the next two months by the committee.
"When the draft rules came out in December, they were seen in the financial institution community as being very dramatic," Bennett said. "In fact, a specific prescriptive price cap is a very dramatic action for the government to take.
"There is also a different set of people controlling the legislative agenda in the House now [due to the recent election]. And I believe that those people who now are setting the hearing schedule are very concerned about the concept of a price control."
She said recent fee increases by major banks on checking accounts in anticipation of revenue loss from the reduction in interchange also has caused concern. She added that a "series of events and unintended consequences" following announcement of the rules "have raised a lot of questions."
Bennett suggested that people wanting to weigh in on the subject email their legislators. The ETA's advocacy website, www.voiceofpayments.org , provides contact information for members of Congress.
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