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Comments due on Federal Reserve debit card interchange routing proposal


The Federal Reserve Board is inviting public comment on proposed changes to Regulation II (Debit Card Interchange Fees and Routing) to clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases. The Board views these clarifications of Regulation II's existing requirements as necessary in light of information indicating that often only one network is enabled for such transactions.

Regulation II implements section 920 of the Electronic Fund Transfer Act (EFTA). Among other things, the regulation requires that there be at least two unaffiliated payment card networks enabled on a debit card to process debit card transactions. At the time the Board promulgated Regulation II, the market had not developed solutions to broadly support multiple networks over which merchants could choose to route card-not-present transactions. Although technology has subsequently evolved to address these barriers, data collected by the Board and information from industry participants indicate that two unaffiliated networks are often not available to process card-not-present debit card transactions because some issuers do not enable two networks for those transactions. The absence of at least two unaffiliated networks for card-not-present transactions forecloses the ability of merchants to choose between competing networks when routing such transactions, an issue that has become increasingly pronounced because of continued growth in online transactions, particularly in the COVID-19 environment.

Comments on the Board's proposed rule will be accepted for 60 days following Federal Register publication.

  • UPDATE on publication and comment period: The proposal has been submitted for Federal Register publication on 5/13/2021. Comments will be accepted through 7/12/2021.
  • Further update: On 6/22/2021, the Federal Reserve Board announced it will extend the comment period to end 8/11/2021.

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