Fed Not Ready To Issue Rule
April 22, 2011 - The deadline for the Federal Reserve to issue a final rule for the Durbin Interchange Fee Amendment as set by the Dodd-Frank Wall Street Reform and Consumer Protection Act was scheduled to be April 21, 2011. However, due to the complexity of the issue and volume of public comments, the Federal Reserve has missed that deadline.
In a March 29 letter to the Chairmen and Ranking Members of the Senate Banking Committee and House Financial Services Committee, Ben Bernanke, Chairman of the Federal Reserve, detailed the reasons for missing the deadline:
"More than 11,000 commenters have provided us input on this proposed rule. Many of the comment letters are quite detailed and extensive and address both specific issues related to the proposed rule and the complexity of the U.S. debit card market in which this rule will operate. We believe the information provided in these comments is important for assessing fully the effect of the proposed rule on the U.S. payments system and its users and providers."
The amendment directs the Federal Reserve to place limits on interchange fees for debit card transactions that are "reasonable and proportional" to the cost of the transaction. The proposed rule issued by the Federal Reserve in December 2010 would slash the fees debit card issuers receive from an average of 44 cents down to 7 to 12 cents per transaction. Despite missing the deadline, Bernanke maintains the final rule will still be issued before the July 21 implementation date.
Credit unions and other small debit card issuers remain concerned that the exemption in the Interchange Fee amendment for card issuers with under $10 billion in assets will prove ineffective and are supporting legislation that would delay implementation so the issue can be studied further. In the Senate, S. 575 was introduced by Sen. John Tester (D-MT) and would delay implementation of the amendment for two (2) years. H.R. 1051 was also introduced in the House by Rep. Shelley Moore Capito (R-WV) and would delay implementation by one (1) year.