Key features of the Fed’s final debit interchange rule:
• Fees for large issuers would be capped at 21 cents, plus 5 bp of the value of the transaction for fraud losses. The interim final rule also will allow debit card fees for large issuers to be increased by one cent per transaction if the issuers meet certain fraud prevention standards.
For example, a $100 transaction would allow an issuer with the appropriate fraud prevention practices to receive an interchange transaction fee of 27 cents: 21 cents plus 5 bp of $100 (five cents) plus one cent.
• Issuers will be required to belong to two independent networks, such as one PIN and one signature network, as long as they’re unaffiliated. A card with only PIN or signature capability must have two unaffiliated networks. The proposal would have required at least two unaffiliated networks for each type of authorization.
• Issuers with assets of less than $10 billion are exempt from interchange fee caps. As CUNA recommended, the Fed will “take steps to reinforce” the exemption for small issuers.
• The Fed will publish annual lists of institutions that are covered by the fee cap and those that aren’t. This will help the payment networks to determine which issuers on their networks are subject to the fee caps.
• The Fed will survey payment networks annually and publish each year a list of the average interchange transaction fees each network provides for its covered and exempt issuers. This list should enable all issuers to more readily compare the interchange revenue they would receive from each network.
This reporting also will allow exempt issuers, Congress, and others to monitor the effect of the statute and final rules to determine if they’re having the desired policy result.
• The Fed intends to collect information every year from networks regarding their interchange fee structures and from covered issuers regarding their costs every two years. The Fed will review data collection forms for these purposes in the near future and will seek public comment on whether rule changes are needed.
- Oct. 1, 2011: Interchange fee caps.
- April 1, 2012: Issuers comply with exclusivity provisions.
- April 1, 2013: General use prepaid cards comply with exclusivity rules.
The interim final rule on fraud prevention costs is effective Oct. 1. Comments are due to the Fed by Sept. 30.