Fed issues final debit card network requirements rule

October 4, 2022

The Federal Reserve issued its final rule amending Reg II’s debit card routing requirements, a rule CUNA, Leagues, and credit unions strongly opposed. It would require debit card issuers to offer two unaffiliated networks which must also be capable of processing transactions under a new framework.

“This final rule not only adds layers of unnecessary complexity to debit card networks, it will likely accelerate the decline in debit card revenue while increasing compliance costs,” said CUNA President/CEO Jim Nussle. “This rule has very little consumer benefits, while making it much harder for community financial institutions to offer safe, affordable card programs.”

Under the final rule, an issuer must configure each of its debit cards so that card-not-present transactions performed with those cards can be processed on at least two unaffiliated networks.

Specifically, it:

  • Specifies that the requirement that each debit card transaction must be able to be processed on at least two unaffiliated payment card networks applies to card-not-present transactions.
  • Clarifies the requirement that debit card issuers ensure that at least two unaffiliated networks have been enabled to process a debit card transaction.
  • Adopts most of the proposed revisions to standardize and clarify the use of certain terminology (e.g., using the term “perform,” rather than “process” or “initiate”) to maintain consistency throughout Regulation II.

The rule becomes effective on July 1, 2023.