New Dodd-Frank Act Rules Cap Debit Card Fees, Increase Consumer Choices


The Federal Reserve Board's final rule affecting debit card transactions, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), took effect on October 1, 2011. The new rule sets a cap for debit card interchange - or "swipe" - fees and prohibits network exclusivity arrangements and routing restrictions. Dodd-Frank also prohibits payment card networks from denying merchants the ability to offer consumers discounts for paying in specific ways - using a debit card rather than a credit card, for example - or setting minimum dollar amounts for credit card purchases.

Debit Card "Swipe" Fees

The new rule caps the maximum permissible swipe fee that the issuer of a debit card can charge for an electronic debit transaction at 21 cents per transaction, plus 0.05 percent of the amount of the transaction. However, the cap applies only to large card issuers - those with $10 billion or more in assets, including the assets of their affiliates. The Board will publish annually lists of institutions that are above and below the small issuer exemption threshold.

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