NAFCU and several other financial services industry groups wrote Federal Reserve Chair Jerome Powell ahead of Wednesday’s Federal Reserve Board meeting on debit card interchange fees and routing under Regulation II. The groups urged the Fed to reject merchant requests to make changes to the regulation and to consider the costs of the regulation on regulated entities and their customers.
“The merchant petitions and presentations to the Board demanding action on Regulation II are riddled with errors, misleading statements, and false comparisons that appear designed to deceive,” the trades wrote. “As in the merchant groups’ litigation against the Federal Reserve on Regulation II, there is consistent cherry-picking of facts and omission of ‘inconvenient evidence’ that contradicts their advocacy efforts.”
In addition, the groups highlighted concerns related to further reducing the current interchange cap, the trend of merchants and processors manipulating routing rights for card-not-present transactions, using outdated data and factors to inform rulemaking efforts, and the impact on consumers.
The trades also flagged concerns with the Fed’s modifications to Regulation II that went into effect earlier this year and the lack of data to quantify how the routing rule has affected the market. They called on the Fed to refrain from any further Regulation II changes until it can analyze the impacts of the rule.
continue reading »