PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

The Industry is Staying Mum Regarding Potential Changes in Debit Routing Rules

Sarah Grotta by Sarah Grotta
November 20, 2020
in Analysts Coverage, Banking, Debit, Merchant
0
Merchants Call on Fed to Swiftly Finalize Proposal to Protect Debit Card Routing Rights

Merchants Call on Fed to Swiftly Finalize Proposal to Protect Debit Card Routing Rights

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The American Banker wrote an article about a topic near and dear to my heart; the potential for the Federal Reserve to restate the rules regarding debit routing. When the Durbin amendment was enacted, all financial institutions, regardless of their asset size made sure their cards offered a global network and an “unaffiliated” network which meant one of the EFT debit networks also called “PIN” debit networks.

Fast forward to current times, those unaffiliated networks have upped their game and no longer require PINs and have also created products friendlier for ecommerce activity. Senator Durbin now wants to mandate that all issuers offer this new debit card option on their cards. Here’s what the American Banker found out:

As pandemic-scarred consumers increasingly shun traditional shopping experiences and make more purchases remotely, the long-simmering dispute between U.S. banks and merchants over debit card fees is intensifying.

The latest flare-up stems from the nine-year-old federal rules that govern transaction routing, and how they should apply in an environment where e-commerce transactions account for an ever-larger share of debit card spending.

Federal Reserve Board Chairman Jerome Powell said last month that the COVID-19 pandemic has brought additional attention to the issue of whether Visa, Mastercard and major card-issuing banks are circumventing the Fed’s rules, particularly in situations where debit-card users do not enter a four-digit personal identification number.

Powell’s comments came in an Oct. 9 letter to Sen. Richard Durbin, D-Ill. Durbin is an ally of the retail industry who authored the 2010 law that not only required routing choice, but also capped debit-card swipe fees at banks with more than $10 billion of assets. In the letter, Powell said that the Fed will continue to consider and evaluate the PIN-less debit issue, but he did not commit to any particular action.

Powell was responding to a July 24 letter from Durbin and Rep. Peter Welch, D-Vt., in which they asked the Fed to consider potential enforcement actions.

The Democratic lawmakers also requested that the central bank play a coordinating role with other agencies, such as the Federal Trade Commission, that share jurisdiction in ensuring that financial institutions do not engage in anticompetitive practices. The FTC reportedly opened an inquiry into debit-card routing issues last year.

None of the networks, processors or the Fed wanted to provide comments for the American Banker’s article which is an indication of the gravity of this issue to both issuers, merchants and the networks.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

Tags: BankingDebitDebit Cardse-commerceMerchantTransaction ProcessingU.S. Bank
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Digital Wallet Use Delivers on Convenience and Security

    Digital Wallet Use Delivers on Convenience and Security

    May 30, 2023
    5 Ways to Protect Your Financial Institution from a Cyberattack

    5 Ways to Protect Your Financial Institution from a Cyberattack

    May 26, 2023
    traditional banks

    How Traditional Banks Can Modernize Without Risk

    May 25, 2023
    identity fraud

    Javelin’s Identity Fraud Study Highlights the Changing Nature of Fraud

    May 24, 2023
    SASE, security-as-a-service

    Security-as-a-Service Secures
    Distributed IT Models

    May 23, 2023
    mule. real-time

    Early Detection of Mule Activity Requires Real-Time Solutions

    May 22, 2023
    embedded finance, ecommerce

    How Retailers Can Enter the World of Embedded Finance Confidently 

    May 19, 2023
    cross-border

    Cross-Border Trade is a Cinch with the Right Payments Partner

    May 18, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download this complimentary report from Brightwell: