Fed completes guideline broadening Durbin routing requirements to card-not-present deals

The Federal Reserve today completed a questionable, ABA-opposed guideline broadening Regulation II, the carrying out policy for the Durbin Amendment. The brand-new guideline extends the required that debit card deals be processed on a minimum of 2 unaffiliated payment card networks—for instance, a PIN debit and a signature debit network—to card-not-present deals. The last guideline likewise mentions that the debit card provider is accountable for guaranteeing a minimum of 2 unaffiliated networks have actually been allowed and standardized, and defines particular terms and expressions in the Fed’s Reg II commentary.

“We are deeply disappointed in the Federal Reserve’s decision to issue a final rule on changes to Reg II without resolving multiple flaws in the proposal identified by the more than 1,700 community financial institutions who offered their comments,” ABA President and CEO Rob Nichols stated. “If ultimately implemented, this rule would amplify the damage of the flawed Durbin Amendment, which never delivered on its promise to lower retail prices for consumers. We will continue to review all aspects of this final rule and consult with our members on our options.”

The last guideline is considerably comparable to the initial proposition, which ABA and other bank and cooperative credit union trade groups strongly opposed after it was released in the spring of 2021. ABA and other groups objected, keeping in mind that the Fed’s Reg II upgrade would enforce pricey and intricate compliance problems, especially for smaller sized card companies—which the Fed’s so-called “clarification” would materially alter the compliance responsibilities related to Reg II.

In authorizing the last guideline, the Fed Board of Governors decreased to embrace ABA-recommended modifications to enhance the proposition. Federal Reserve Governor Michelle Bowman was the only guv to vote versus providing the last guideline. “During the public comment process, community banks raised substantial concerns with the proposal,” Bowman stated. “Although the board has attempted to identify the likely effects of the proposed rule based on available information, I believe that significant questions remain about how the rule will affect banks, and particularly community banks, with respect to both fraud and the cost of compliance. Given this continued uncertainty, I do not support the final rule.”


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