When originally issued last year, Regulation II contained an interim rule pertaining to the allowable fraud adjustment for exempt issuers. Taking a non-prescriptive approach, the Federal Reserve allowed exempt issuers to earn $0.01 more in interchange per transaction if they were certified by the networks as having an “effective” fraud prevention program for debit card transactions.
Ultimately, the Federal Reserve arrived at the conclusion that a $0.01 adjustment is still the right amount. Issuers essentially will self-certify that they are in compliance with the statute in this regard, which requires them to notify the card networks annually.
From the Fed’s press release:
To receive an adjustment, an issuer will be required to review its fraud-prevention policies and procedures, and their implementation, at least annually. An issuer also will be required to update its policies and procedures as necessary in light of their effectiveness and cost-effectiveness and, as currently required, in light of changes in the types of fraud and available methods of fraud-prevention.
Click here to read more from the press release.