Welcome To
The Bottom Line

It has been almost a year and a half since the Fed had requested public comment on a “non-substantive” proposed amendment to Regulation II that would 1.) specify that the prohibition on network exclusivity applies to card-not-present debit card transactions, 2.) clarify the responsibility of the issuer to enable at least two unaffiliated networks to comply with the prohibition on network exclusivity, and 3.) standardize and explain the use of certain terminology. The proposal was anything but non-substantive and would have fundamentally altered issuers’ compliance obligations under Durbin. The Fed received more than 2,750 comments, and it has taken nearly a year since the comment period was completed to receive a final ruling. The ruling has finally arrived.

The Federal Reserve recently released its annual report on debit card interchange fees and, to the untrained eye, the results are thoroughly unremarkable. The Fed has tracked this data annually since the Durbin Amendment took effect in late 2011, as a means of deciphering the interchange landscape.

Following a visible jolt to the trend line in 2012 reflecting Durbin’s targeted intent, the Fed’s charts have remained quite stable. Beneath the surface, however, factors like volume mix shifts, pricing differences between network providers, and newly added detail on certain transaction types reveal a wealth of information that can be used for card portfolio optimization.