WASHINGTON–Both CUNA and NAFCU have expressed opposition to a recent announcement by the Federal Reserve that it had finalized updates to the Board’s Regulation II rule, which states card issuers must authorize “at least two payment card networks” on card-not-present transactions, including online.
CUToday.info first reported on the Fed announcement here.
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, the new rule:
- 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.
‘Unnecessary Complexity’
“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.”
‘Riskier Networks’
NAFCU President and CEO Dan Berger said in response to the Fed announcement, “The Fed’s final rule on Regulation II fails smaller financial institutions, the credit union industry at-large and ultimately consumers. The Fed’s rule mandating debit card issuers to enable at least two payment networks for debit transactions will force small issuers to allow transactions over riskier networks, increasing fraud costs for our nation’s community financial institutions.
“NAFCU and its member credit unions have seen little good come out of Reg II or the Dodd-Frank Act for that matter – including the failed Durbin Amendment. Imposing this final rule would increase implementation and fraud costs for smaller financial institutions, on top of everything else they’re battling with inflation, all for the benefit of big box stores and big online retailers such as Amazon. NAFCU and our members will continue to engage the Fed and Congress to underscore the negative impacts of this rule.”
The rule becomes effective July 1, 2023.
The Very Best in CU Reporting. Every Morning. To Your Inbox. At a Total Cost of ‘Free!’
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.