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And since the Fed staff is obliged to on routing and exclusivity." Failing that, the 17-page letter requested specific
read them all, it's going to take time changes and four years for issuers to prepare for compliance.
for staff to present recommendations
to the Fed Board of Governors, which Four years is a long lead time, and unlikely. Debit card issuers were allowed just
has final say over any such changes. 10 months to start complying with the original rules pertaining to merchant
routing choice for debit cards.
Both the DOJ and the FTC wrote
that they favored the Fed's current Patti Murphy is senior editor at The Green Sheet and co-host of the Merchant Sales Podcast.
proposal, but added that it doesn't Follow her on Twitter @GS_PayMaven.
go far enough. "[T]he proposal is one
step among many that could be taken
to address the lack of competitiveness
in the debit card payment market,"
the DOJ wrote.

Both said the Fed should prohibit,
outright, "routing-based incentives"
that encourage issuers to take steps
that ensure the card brands get
more debit traffic on their networks.
Routing-based incentives include
disabling (or not enabling) certain
features offered by networks other
than Visa and Mastercard. "Such
actions eviscerate merchant routing
choice," the FTC wrote.

Banks balk
A coalition representing financial
institutions that has long accused
the Fed of regulatory overreach with
Reg II blasted the proposed change.
The coalition—which includes the
American Bankers Association,
the Consumer Bankers Association
and the Credit Union National
Association—argued it would result
in a $27 billion windfall to the largest
retailers at the expense of small
merchants, banks and consumers.

"During this trying time, our members
have proven critical to maintaining
the health of an American economy
under siege. Our members also have
greatly stepped up their payments
products to support American
consumers and businesses," the
group wrote. "We did not anticipate
a new mandate that would require us
to undertake distracting, expensive,
time-consuming efforts to change
our core network infrastructure."

The coalition wants the Fed to
withdraw the proposed change
"until it undertakes a proper analysis
on the impact of any rule making

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