On October 25, 2023, the Board of Governors of the Federal Reserve System (the “Board”) issued a notice of proposed rulemaking that would amend the Board’s Regulation II to sharply reduce the maximum interchange fee that covered issuers—debit card issuers with $10 billion or more in consolidated assets—generally may receive for debit card transactions. The proposed amendments would also establish an automatic mechanism that would update the interchange fee cap every other year based on data received by the Board in biennial surveys of covered issuers. The Board adopted Regulation II’s current interchange fee cap in 2011 and 2012 pursuant to Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the so-called “Durbin Amendment”). The Durbin Amendment requires the Board to establish standards for assessing whether the amount of any interchange fee is “reasonable and proportional to the cost incurred by the issuer with respect to” a debit card transaction. Under the proposed amendments, for a $50 debit card transaction subject to Regulation II, the maximum permissible interchange fee would be 17.7 cents, down from 24.5 cents under the current rule.
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