The Federal Reserve Board’s proposed rules regarding debit card interchange and network routing so far have generated only 35 comments, but one legal expert suggests “many” letters now in development will appear closer to the Feb. 22 comment deadline.
The Fed on Dec. 16 unveiled proposed rules that essentially would cap the debit card interchange rate at 12 cents per transaction and prohibit network-exclusivity arrangements and routing restrictions (see story).
The proposal includes a request-for-comment period, and the agency says it will weigh the comments it receives when crafting the final rules.
The majority of comments through Dec. 29 are from consumers and business owners supporting debit-interchange regulation, with a scattering of financial services organizations protesting the proposal.
Steve Bartlett, president and CEO of the Financial Services Roundtable, a Washington, D.C.-based trade association representing banks and financial-services providers, wrote that he is “shocked and dismayed” at the proposal, which “falls substantially short” of capturing the true costs of providing debit card services.
Bill Cheney, president and CEO of Credit Union National Association, described in his comments “serious concerns” with the proposal, particularly its “lack of any enforcement mechanism for the exemption of small issuers” from the new rates set for issuers with at least $10 billion in assets. He also noted his concern that the 12-cent interchange cap “ultimately may be applied to small issuers in the marketplace if the exemption is not fully implemented.”
Bill Hardee, the proprietor of Austin, Texas-based Warehouse Saloon & Billiards, wrote in support of the proposal, which he says would provide relief from card fees that have “skyrocketed” in recent years. “I cannot speak for other merchants, but I would certainly pass these savings on to the consumer in the form of lower retail prices,” he wrote.
The main wave of comment letters with “substantive” arguments against the proposed new rules likely will begin to appear in late January, Duncan Douglass, a partner with the Atlanta-based law firm of Alston + Bird, wrote PaymentsSource in an e-mail.
“Arguments will range from allegations that the Fed overstepped its statutory authority in setting price caps ... to challenges to the Fed’s data-collection and analysis methods,” Douglass predicts.
Among the letters will be “a lot of arguments from providers of specific card- product types (such as benefit cards, mobile payment devices, etc.) because the Fed didn’t allow for any exceptions (or) special treatment for these products, even though they include some unique features and characteristics that make compliance with the proposed rules particularly challenging,” Douglass wrote in the e-mail.
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