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Durbin Amendment

Durbin Amendment. June 2011. Durbin Amendment Milestones . An amendment to limit interchange fees for debit transactions, the “Durbin Amendment” as part of the of the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted into law July 2010 and will be effective July 21, 2011. .

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Durbin Amendment

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  1. Durbin Amendment June 2011

  2. Durbin Amendment Milestones • An amendment to limit interchange fees for debit transactions, the “Durbin Amendment”as part of the of the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted into law July 2010 and will be effective July 21, 2011. Feb 2011 July 2010 Dec 2010 Oct 2011 July 2011 June 2011

  3. Durbin Amendment Key Provisions • Regulated Interchange • Impacts FIs with assets of $10B and greater • Currently proposed at $0.12 maximum rate (subject to final Fed review and ruling) • Interchange restricted for debit and single load prepaid programs. • Government , general purpose reloadable prepaid and credit card programs are excluded • Exclusivity • Impacts all FIs • FIs must maintain at least two debit network relationships • Networks with POS access to DDAs for purchases • No distinction between signature and PIN authentication • The two networks must not be affiliated • MasterCard® signature/Maestro® PIN or Visa® signature/Interlink PIN • Merchant Controlled Network Routing • Impacts all FIs • Issuers can no longer designate routing preference between networks • Multiple PIN network relationships will likely result in reduced interchange revenue

  4. Exclusivity Two Potential Options • Alternative A • One signature and one PIN based debit network • Must be unaffiliated providers • Virtually eliminates negative impacts of merchant controlled routing • Relatively easy implementation, proposed effective Oct 2011 • LIKELY EXCLUSIVITY REQUIREMENT • Alternative B • Two signature and two PIN based debit networks • Merchants would have at least two routing options in both the signature and PIN channels • Would allow for aggressive “race to the bottom” interchange competition between the networks – dramatically reducing issuer revenue • Operational challenges, proposed effective Jan 2013 • UNLIKELY THAT THIS OPTION WILL BE REQUIREMENT 4

  5. Response to Durbin Provisions Regulated Interchange

  6. Response to Durbin Provisions Exclusivity

  7. Response to Durbin Provisions Merchant Routing

  8. NYCE Payments Network StrategicFocus AdvancedFunctionality ConsistentService Size & Scale Issuer-Centricto optimizeexisting card base transactions Drive migration ofexpense-basedtransactions tohigher value formsof payment 83% exclusiveTransactions A Non-CompetingNetwork Real-TimeFraud Monitoring and ManagementText and MobileApplications Consistent recordof Innovation Approval Rate Management No Impact toCardholdersduring Implementation Fully engagedwith merchants Reporting and DataIntegration Coverage in all50 States360,000 ATMs22,500 Surcharge-Free ATMs2 million POSLocations1,400 DirectBillersIndustry LeadingAvailability Issue the Card

  9. Thank You

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