NAFCU calls on Fed to delay effective date of Reg II changes

NAFCU, along with other financial services industry trade groups, wrote to the Federal Reserve Friday urging the agency to delay the effective date of its final rule that requires debit card issuers to enable and allow merchants to choose from at least two unaffiliated networks for card-not-present (CNP) transactions, such as online purchases.

The rule modified Regulation II, which covers debit card interchange fees and network routing exclusivity.

NAFCU previously urged the Fed to withdraw the modification flagging the negative impact on credit unions: If debit card issuers do not currently have this capability on their debit cards, they will need to reissue all debit cards by July 1 – a huge undertaking, especially for smaller institutions.

This rule requires issuers to enable one single-message and one dual-message network; enabling a single-message network for CNP transactions would ultimately lead to a higher risk of fraud, as credit unions may not trust these networks to handle increased risk of fraud.

 

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