The federal reserve board met yesterday and put together their 'interim' final rulings on the Durbin Amendment. There was some movement on the proposed debit cap and a deadline extension was granted for the implementation of the Durbin Amendment itself. How frustrating for all parties involved to have this financial reform drag on and on- many questions still remain unanswered and the consensus is, that only time will tell what the real ramifications will be for consumers, merchants, processors & card issuing banks alike. Here are some highlights from the ruling:
- October 1, 2011 would be the effective date for the interchange fee standards (including, on an interim basis, the fraud-prevention adjustment), as well as the routing restrictions.
- A delayed effective date of April 1, 2013, for certain cards with particular technological challenges, including certain health benefit cards, as well as certain prepaid cards.
- A modified version of the proposed Alternative 2 (stand-alone cap) for the interchange fee standard, with a cap composed of a base component of 21 cents and an ad valorem component of 5 basis points to reflect a portion of fraud losses.
- With respect to the fraud-prevention adjustment to the interchange transaction fee, staff recommends that the Board adopt an interim final rule that allows a fraud prevention adjustment of 1 cent per transaction conditioned upon the issuer adopting effective fraud prevention policies and procedures.
For the full text of the ruling CLICK HERE
I've received many calls asking, 'how does this affect our financial institution' and 'how does this affect my credit card processing rates' and finally, 'how will my debit card change? If you spend a few minutes reading the 37 page ruling, your first reaction might be the same as mine- WHAT? The ruling is confusing and contains an incredibly large amount of guesstimations on the overall impact of this financial ruling. In one place, the ruling even stated:
- Staff believes that it is unclear whether consumers in aggregate will benefit from or be harmed by the draft final rule.