Highly Anticipated Durbin Amendment Regulations Set to Implement by FRB

On June 29th, 2011, The Federal Reserve Board (FRB) released the final regulations implementing Section 1075 (the Durbin amendment) of the Dodd-Frank Wall Street Reform Act. Within the Act, the Fed was directed to establish regulation standards involving debit card interchange fees and network exclusivity. Those working with debit card guidelines within your credit union should take note of these regulations and the effective deadline set to take place.

Key components of the Act include:

• Debit Interchange Rates: debit card interchange rates must be reasonable and proportional to the cost of each debit transaction.
• Circumvention of Debit Interchange: payment card networks may not use network fees to directly compensate debit card issues and circumvent the interchange rate restrictions.
• Fraud Standards: the FRB may adjust the debit interchange rate based on certain fraud prevention activities undertaken by a debit card issuer.
• Network Exclusivity: debit card issues may not enter into exclusive processing arrangements with one payment card network or two affiliated networks.
• Merchant Routing: merchants will be allowed to direct the routing of debit card transactions.

Those potentially affected by these new rules are encouraged to review them closely and take any necessary measures to ensure compliance. Should you need additional information regarding these changes, First Data has published a paper that summarizes the proposed and final regulations for each of the key components listed above. You can view this paper on their web site. Additionally, for members using Corporate One’s ATM/debit program through our partnership with PSCU, there are numerous support materials out in PSCU's Member Connect under Debit Interchange Regulation.

Finally, the Fed has published lists of regulated and exempt financial institutions. As it is the responsibility of each institution to ensure the accuracy of the information on the lists and contact the Fed to resolve any discrepancy, credit unions should look to the Fed’s site to review compliance details on their own ATM/debit program. Detailed instructions on how to review the lists and request any corrections are provided on the Fed’s site.

Amy MacMullen is Corporate One’s director of card services and can be reached at 866/MyCorp1, ext. 9339 or amacmullen@corporateone.coop.