The final rule simplifies the criteria required in an issuing bank’s fraud prevention policies. In order to receive the adjustment, an issuing bank must review its policies and procedures yearly in addition to consistently updating its program as necessary.
Additionally, the final rule keeps the requirement that an issuing bank receiving the adjustment must notify the payment card networks every year as to whether it expects to receive the adjustment.
The final rule also prohibits an issuing bank from receiving a fraud-prevention adjustment if the institution is largely noncompliant with the Federal Reserve’s fraud-prevention standards.
Dillon Shea, the regulatory affairs counsel at the National Association of Federal Credit Unions, said that the rate will likely become the standard rate for all card issuers.
“Unfortunately, the Durbin Amendment and the board’s interchange rules will ultimately disadvantage Main Street credit unions and consumers to the benefit of big box retailers,” Shea said, according to Credit Union Times.
The Merchants Payment Coalition also criticized the Fed’s decision on the rule, saying that merchants will pay for fraud prevention even if banks do not prevent fraud. The coalition said that the rule will be ineffective and that regulators should examine whether banks actually prevent fraud before they are issued adjustments.
The rule is scheduled to take effect on Oct. 1.