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Compliance deadline for Reg II amendments

07/01/2023

The Federal Reserve Board on October 3, 2022, announced final updates to its rule concerning debit card transactions. As required by the statute (Section 1075(b)(1)(A) of the Dodd-Frank Act), the updates specify that debit card issuers should enable at least two payment card networks to process all debit card transactions, including "card-not-present" transactions, such as online payments. The final rule is substantially similar to the proposal issued last year.

The rule underscores that debit card issuers should enable at least two unaffiliated networks to process debit card transactions. Input received in connection with the proposal suggests that many debit card issuers, and especially most community bank issuers, are already compliant with the final rule. In response to public comments, the final rule also includes certain changes that make it easier for debit card issuers to determine whether they are in compliance with the final rule. The rule will encourage competition between networks and incentivize them to improve their fraud-prevention capabilities.

The rule does not modify requirements concerning interchange fees. As previously stated, the Board will continue to review interchange fee requirements in light of the most recent debit card industry cost data collected by the Board, and may propose to modify these requirements in the future. The final rule will be effective July 1, 2023.

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