Fed extends comment period on debit card fee proposal

Fed extends comment period on debit card fee proposal

The Federal Reserve has announced a further extension to the public comment period for a proposed rule that could impact the fees charged by merchants for debit card purchases.

The proposed rule, initially issued back in March 2022, seeks to amend Regulation II, also known as the “Durbin Amendment,” which limits the fees that banks can charge merchants for debit card transactions.

Several industry groups had expressed concerns regarding the potential consequences of the proposed rule, including the Electronic Payments Coalition and the National Retail Federation, among others. These groups argued that the rule could result in unforeseen negative effects on consumers.

The comment period, which was initially set to end on September 10, 2022, has now been extended by an additional 60 days. This extension provides interested individuals, organizations, and parties more time to submit their feedback and opinions on the proposed changes.

The Federal Reserve believes that extending the comment period will promote a more comprehensive understanding of the potential impacts and allow for a wider range of viewpoints to be considered.

Once the comment period ends, the Federal Reserve will evaluate the received feedback and other market data before making a final decision on whether to implement the proposed rule or not.

Consumer groups and organizations representing small businesses have also spoken out on the issue. They argue that the current cap on debit card swipe fees has benefited low-income individuals and small merchants, saving them billions of dollars each year. Further changes to fee structures may disrupt this balance.

Debit card fees have long been a contentious issue between banks, merchants, and consumers. The Durbin Amendment was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to address concerns about anti-competitive practices and excessive fees.

The Federal Reserve’s announcement of an extended comment period comes amidst a wave of proposed changes to financial regulations, as policymakers assess potential modifications to various rules and guidelines in response to evolving market dynamics.

Interested parties can submit their comments to the Federal Reserve via the official Federal Register website or by regular mail. All comments received, including any personal information provided, will be made publicly available online.

If enacted, the proposed rule could have far-reaching implications for the debit card landscape, potentially affecting consumer costs, merchant profitability, and the overall dynamics of electronic payments in the United States. As such, stakeholders from all sides of the issue are encouraged to submit their opinions and suggestions during the extended comment period.

For now, all eyes will be on the Federal Reserve as it weighs the comments received and determines the path forward regarding debit card fee regulations.