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FRS RIN: 7100-AD63 Publication ID: Spring 2011 
Title: ●Regulation II--Debit Card Interchange Fees and Routing (Docket No. R-1404) 
Abstract: The Board requested public comment on proposed new Regulation II, Debit Card Interchange Fees and Routing, which:(1) Establishes standards for determining whether an interchange fee received or charged by an issuer with respect to an electronic debit transaction is reasonable and proportional to the cost incurred by the issuer with respect to the transaction, and (2) prohibits issuers and networks from restricting the number of networks over which an electronic debit transaction may be processed and from inhibiting the ability of a merchant to direct the routing of and electronic debit transaction to any network that may process such transactions. With respect to the interchange fee standards, the Board requested comment on two alternatives that would apply to covered issuers: (1) An issuer-specific standard with a safe harbor and a cap, or (2) a cap applicable to all such issuers. The proposed rule would additionally prohibit circumvention or evasion of the interchange fee limitations (under both alternatives) by preventing the issuer from receiving net compensation from the network (excluding interchange fees passed through the network). The Board also requested comment on possible frameworks for an adjustment to interchange fees for fraud-prevention costs. With respect to the debit-card routing rules, the Board requested comment on two alternative rules prohibiting network exclusivity: one alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks for each type of transaction authorization method. Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant's ability to direct the routing of an electronic debit transaction over any network that may process such transactions. 
Agency: Federal Reserve System(FRS)  Priority: Substantive, Nonsignificant 
RIN Status: First time published in the Unified Agenda Agenda Stage of Rulemaking: Final Rule Stage 
Major: No  Unfunded Mandates: No 
CFR Citation: 12 CFR 235   
Legal Authority: 15 USC 16930   
Legal Deadline:
Action Source Description Date
Final  Statutory  Final rules on interchange fee standards  04/21/2301 
Timetable:
Action Date FR Cite
Board Requested Comment  12/16/2010  75 FR 81722   
Board Expects Further Action  07/00/2011    
Regulatory Flexibility Analysis Required: Yes  Government Levels Affected: Undetermined 
Small Entities Affected: Businesses  Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: Yes 
Agency Contact:
Dena Milligan
Senior Attorney
Federal Reserve System
Legal Division,
Phone:202 452-3900