NOTE: The VISA call will be held Friday, August 19 at 1:30 PM. Dial-in: (888) 391-6569; passcode: VISA UPDATE
CUNA hosted VISA and Mastercard sponsored conference calls this week in anticipation of the interchange rule compliance deadline of October 1. The main question has centered on the ability of debit networks to support two interchange structures, one for issuers with less than $10 billion in assets and one for those with more than $10 billion. Also, credit unions need assurances that interchange rates for issuers below $10 billion will be maintained.
MasterCard plans to implement a two-tiered structure, keep existing rates and establish its own online debit interchange registration system for its member institutions to denote if they are above or below the $10 billion-asset threshold. Further details on the MasterCard conference call can be read by clicking here.
Tracking possible merchant discrimination is also of concern to credit unions. CUNA has announced plans to implement a system before the October 1 effective date for credit unions to report any signs of merchants steering consumers away from using debit cards issued by institutions below the $10 billion-asset threshold.
Refresher on the Interchange Rule:
The Federal Reserve Board’s interim final rule, which was released late June, will cap debit interchange fees for issuers with more than $10 billion in assets at 21 cents, to cover network connectivity, hardware, software, and labor costs, as well as costs related to network processing and transaction monitoring. An additional five basis points per transaction may be charged to cover fraud losses. Furthermore, if financial institutions are in compliance with Fed established fraud prevention standards, an additional penny may be charged.
Debit card issuers with less than $10 billion in assets are exempt from the direct impact of the cap provisions. Prepaid cards and government-issued cards are also exempted.
The interim final rule will also require issuers to provide a debit card that can be processed on at least two unaffiliated card networks, such as one signature network and one unaffiliated PIN network. Alternatively, issuers may also provide a debit card that can be processed on two or more unaffiliated signature networks, but not on any PIN networks, or that can be processed on two or more unaffiliated PIN networks, but not on any signature networks. The mandatory compliance date for financial institutions to have their debit cards enabled for processing by at least two unaffiliated networks is April 1, 2012.
CUNA is seeking comments on the interchange fee fraud-prevention adjustment by September 16. Access the comment call by clicking here.