NAFCU Regulatory Affairs Counsel James Akin wrote to the Federal Reserve Tuesday in response to proposed modifications to Regulation II clarifying the requirement for debit card issuers to enable – and allow merchants to choose from – at least two unaffiliated networks for card-not-present (CNP) transactions, such as online purchases.
The Fed issued the proposal to make changes to Regulation II – which covers debit card interchange fees and network routing exclusivity – in May.
“NAFCU requests that the Board immediately withdraw the proposed modification to Regulation II,” wrote Akin. “To the extent that the Board continues in this rulemaking, NAFCU requests that the Board provide further analysis on the impacts of the proposed modification on the payment routing ecosystem, and that it consider the severe repercussions that the modification would have on credit unions and their members due to increased fraud risk and compliance costs, and decreased interchange income.”
Akin argued that Regulation II and the Durbin Amendment be repealed for the benefit of consumers and opposed any type of reopening. In addition, he flagged concerns that this change will produce a negative impact on credit union interchange income and arbitrarily revoke existing guidance.
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