Those who have followed the rulemaking under the Durbin Amendment and the merchants' litigation challenging the final debit interchange fee rule, Regulation II, have been treated to an extended debate about arcane cost issues the likes of which normally occupy ratemaking boards, not the Federal Reserve Board. Starting with the rulemaking, and in large part because of the methodology the Board used in that rulemaking, the debate has been almost exclusively about the costs of debit card issuers. Specifically, the Board, the merchants, and the district court have debated about which costs issuers should and should not be able to recover through interchange fees. The Board's position is that an issuer should not be allowed to recover all of its costs. Compared to the merchants, however, the Board thinks more costs are "in" than "out." Given these disagreements, the public debate has devolved into hyper-technical statutory and economic arguments about covered and excluded costs.
Please click here to read the full text and footnotes of this article (Page 62).
Originally published in Banking Perspective, Vol. 1, Issue 1.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.