Do the changes to Reg II effective 10/1 apply to banks that issue Visa or MasterCard branded debits cards, or to Visa and MasterCard themselves?

If it actually applies to banks that issue Visa or MasterCard branded debit cards, does it apply to banks with assets of less than $10 billion, more than $10 billion, or all banks?

Thank you for your help.

The exemption is;
§ 235.5 Exemptions.
(a) Exemption for small issuers. (1) In general. Except as provided in paragraph (a)(3) of this section, §§ 235.3, 235.4, and 235.6 do not apply to an interchange transaction fee received or charged by an issuer with respect to an electronic debit transaction if—

(i) The issuer holds the account that is debited; and

(ii) The issuer, together with its affiliates, has assets of less than $10 billion as of the end of the calendar year preceding the date of the electronic debit transaction.

To tack on to this, does anyone know if anything has changed as far as merchants being able to add on a fee for processing a debit card transaction as credit if the consumer wants it run as credit? We had a customer come in last week upset because they were at KFC and when they said they wanted to use their card as a credit, they were informed that would involve a $.49 fee due to a "new law". As far as our external compliance resources and card processor can tell us, there's nothing that's actually in force at this point that would allow it but that it's still "pending".

To the best of what I'm able to find, checkout fees are still prohibited by the VISA card agreement and they have a page on their site for reporting merchants charging a fee...I'm thinking I should suggest this person report the store.

As part of the proposed class action settlement with several grocery chains, VISA has agreed to allow merchants to begin surcharging credit transactions (unless prohibited by state law.) According to VISA's Press release this change is expected to be effective in early 2013. However, many of the plaintiffs are challenging the settlement as not providing enough concessions so it is unclear whether or not the settlement will be approved.

In any case, it is still a violation of VISA Operating rules at this time to tack a surcharge on to a credit transaction.

Thanks Brian, that confirms what our vendors had referenced.

Even though most KFCs are locally owned franchises, I would tell the customer to let corporate know the story & that they don't appreciate being lied to by their employees. They could also point out that it is a violation of Visa operating rules. Corporate probably won't take kindly to one of their franchises breaking the rules like that (I would hope).
http://www.kfc.com/contact/

I noticed that Regulation II, Limitations on payment card restrictions goes into affect on April, 1, 2013. Has there been anything that has changed since this was discussed in August? I know there are defintions, information about fraud-prevention adjustment, but since I am less than a $10 billion dollar bank, this doesn't apply to me, correct? I am a little concerned about the reloadable cards because we do offer those, and we are not the issuer. I read something about a May 1 date for those.

Anyone have any information on my question? Thank you!

I had a diner charge me $.25 for using my debit card. Is that part of Visa's agreement too?

The Fed just issued an updated FAQ on Reg II. See our Top Stories page for March 14 (www.bankersonline.com/topstory/topstory.html#0314) for our blurb and a link.

I am wondering with this regulation how you do a compliance monitoring. The FED called and asked if our compliance department monitors for fraud. I am deemed with the challenge to create a monitoring report and I am at a loss of what to review.

Are they asking about monitoring cardholder transactions for fraud or monitoring your program for compliance with the regulation? I

FED also indicated that we need a Board approved policy. Now I am being asked where in the regulation it states that is needed.

There are 2 parts to Reg. II -- the interchange limits, which only apply to big banks (i.e., above $10B), and the unaffiliated network requirement, which applies to every debit card issed by every entity, and went into effect April 1 for certain prepaid cards. The issuer of your card has to comply with that, although there may be a contract between the issuer and your bank about who has to comply with this type of law. Typically, many debit cards (prepaid cards are a subset of debit cards)were "signature based" and the unaffiliated network added was a PIN based network (but this isn't a required pairing). For example, a Visa signatue network being added to a MasterCard sig network would be sufficient.
As to the May 1 deadline -- that is a date related to compliance with the unaffiliated requirement with reloadable prepaid cards issued prior to April 1, 2013. Those cards must be brought into compliance with the network rule too.