“Proposed Fed Interchange Rules: The Good, the Bad, and the Ugly”

December 21, 2010
1:00 PM ET

Overview

• Section 1075 of Dodd-Frank Act (Durbin Amendment) amends the
EFT Act
– Interchange fee for any “electronic debit transaction” must be
“reasonable and proportional” to cost incurred by issuer
• FRB required to prescribe regulations establishing standard
• Statute requires final rules by April 21, 2011 (fraud
adjustment rules unlikely)
– Prohibits network exclusivity and routing restrictions
• Statute requires final rules by July 21, 2011
– FRB voted on December 16th to issue proposal to implement
requirements
– Comments due by February 22, 2011

Key Definitions

• Issuer – Any person that issues a debit card
• Interchange transaction fee – Any fee established, charged or
received by payment card network and paid by merchant or acquirer 
to compensate issuer
• Network fee – Fee charged by payment card network for electronic
debit transaction, other than an interchange transaction fee
• Payment card network – Covers both credit and debit card networks
• Debit card – Any card, payment code or device used to debit an
account through a payment card network (includes consumer and
business accounts)


(Click here for complete printable .pdf)

“Proposed Fed Interchange Rules: The Good, the Bad, and the Ugly”