Durbin Decided; Rule Provides No Distinction for CNP Transactions

July 5, 2011

The divisive debate over the Durbin Amendment came to an end last week when the Federal Reserve Board of Governors released its highly anticipated final rule implementing debit interchange regulation. As had been rumored for weeks, the Fed raised the 12-cent per transaction cap it had initially proposed last December to 21 cents per transaction plus 5 basis points of the transaction’s value after a furious lobbying effort by the banking industry. The final rule made no distinction between card present and CNP transactions. The new debit interchange caps and a proposed adjustment for fraud costs are scheduled to go into effect on Oct. 1, 2011. Network exclusivity provisions, which require two unaffiliated network options per card, also are set to go into effect on that date. The full staff memorandum to the Board of Governors, the interim rule on the fraud prevention adjustment, and the final rule ( Regulation II, Debit Card Interchange Fees and Routing ) are available online.