Insights Magazine from CMSPI
Page 25 | November 2021
MERCHANTS ASK FED TO OK ONLINE DEBIT ROUTING PROPOSAL BUT BANKS PUSH BACK The U.S. Federal Reserve received more than 2,000 written comments from banks, card networks, merchants and others this summer on existing debit regulation clarifying that merchants’ legal right to choose where to route debit card transactions for processing applies the same online as it does in stores. Many comments were reiterated responses from the banking industry opposing the proposal and citing the impact it could have on their revenues. Visa highlighted market challenges with adopting the PINless technology
Senator Richard Durbin, the author of the landmark law, expressed support for the Fed’s proposal, calling on the agency to “make clear” that card issuers “must ensure” that two networks are enabled regardless of where a debit transaction takes place. 5 Most notably, the U.S. Department of Justice and Federal Trade Commission both filed comments in favor of the Fed’s proposal. 6,7 While the Fed has not yet responded to the comments it received, it is important that merchants monitor the Fed’s reaction. CMSPI estimates that fully enabled debit routing choice for online and other card-not-present transactions could achieve between $2 billion and $3 billion in annual savings for merchants. Industries that have large volumes of Ecommerce and digital transactions have the most to gain from a favorable decision from the Fed. While the agency’s timeline is unclear, merchants need to be ready to take advantage of the opportunity if online routing choice finally becomes a reality.
needed to make online routing choice work, saying the Fed’s proposal “could undermine the safety and efficacy of the payments system” and could expand routing choice “in a way that restricts the introduction of new technology.” 4 Merchants and merchant associations said the 2010 Durbin Amendment passed by Congress – which required that debit cards be able to be processed over at least two unaffiliated networks rather than just Visa or Mastercard – was intended to apply to all debit transactions, not just those in stores.
APPROXIMATELY WHAT PERCENTAGE OF YOUR COMPANY’S TOTAL
E-COMMERCE/M-COMMERCE FRAUD LOSSES COME FROM U.S. CUSTOMER ACCOUNTS VERSUS NON-U.S. CUSTOMER ACCOUNTS?
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