The Fed asked for comments regarding its intention to clarify Regulation II, the regulation that creates debit interchange caps and requires issuers to offer two unaffiliated debit networks on its cards. Boy did they ever get a response. When I checked at around noon on Aug. 9th, there were over 560 comment letters with two days left to go for further submissions.
All comments are posted here if you are interested.
As Payments Dive reported, many of the comments were from financial institutions or merchants responding with a form letter, but there were a few unique submissions:
The Merchants Payments Coalition sent off its comment early in a short, to-the-point June letter, saying: “Regulation II is clear, but widespread failures to follow the law have continued for too long and at a high cost to U.S. merchants and their customers,” and adding that financial institutions not following the regulation as clarified are in “violation of the law.” That group of five merchant organizations said the clarifications were nonetheless “imperative.”
The American Booksellers Association also supported the Fed’s efforts to clarify the regulation in its Aug. 2 letter, saying that a massive increase in online book sales last year didn’t stop the permanent closure of at least one independent bookstore every week since the COVID-19 pandemic began. “The lack of online routing choice for debit card transaction meant an added expense for bookstores, and it continues to dampen pandemic recovery efforts,” Allison Hill, the association’s CEO, wrote in that organization’s Aug. 2 comment.
Meanwhile, the CEO of BOK Financial, a major bank holding company across the southern Midwest and Southwest, also called for changes to the rule proposal. The tweaks suggested in its July 20 letter sought to roll back some aspects of the regulation, including asking adding allowances for “temporary exceptions to the availability of two networks.” His opposition echoed that of other banks.
While several of these submissions seek to change the injustices of the regulation, there is a limit to what the Fed can do. They can’t change the regulation, that would require Congress to step in.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group