Skip to content
Back

Federal Courts May Reshape Debit Card Industry in U.S.

| Payments Journal

In a further illustration of the determination of merchants to wrestle control over cost of payment acceptance away from the global card networks, a Federal Court this week validated their argument that Regulation II rules were counter to the intent of Congress in writing the Durbin Amendment, and in effect, ordered the Federal Reserve to revisit its regulation. Another hearing has been scheduled for Aug. 14th. The Federal Reserve has not responded as of this writing.

The court was not ambiguous in citing that the existing debit interchange fee cap was improperly calculated and included costs over and above basic authorization, settlement, and clearing. It also ruled that debit network routing choices were not provided for all authorization types, which Mercator Advisory Group interprets as meaning two networks for PIN transactions and two networks for signature transactions. So far, we have seen nothing mentioned specifically about the fraud adjustment component of the regulation.

 

Get the Latest Updates Delivered to Your Inbox

By submitting you agree to our Terms & Conditions