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More data sought by banks on Fed’s new fee caps

Banks recently asked card networks to make additional data available on a regular basis about transactions processed under the new fee caps set by the Federal Reserve Board.
 
In October, the board created rules capping the fees that banks can charge merchants each time customers buy items with debit cards. The fees were capped at approximately 24 cents per transaction as part of the Durbin amendment to the Dodd-Frank Act. The previous average before the law was around 44 cents per transaction, American Banker reports.
 
"From internal banks' perspective, this involves a combination of bank monitoring and testing, so we can make sure the amounts (of fees per transaction) we're receiving are not greater than the amounts we're supposed to receive under the rule," Candace Davis, the associate general counsel at Capital One, said, according to American Banker.
 
Davis spoke on Monday during a panel discussion at the winter meeting  of consumer financial attorneys of the American Bar Association. Davis said that the new law is changing the structure of business agreements between debit-card issuing banks and the networks, such as Visa Inc., that process debit transactions.
 
Dena Milligan, an attorney with the Federal Reserve, said that the agency is currently developing procedures and guidance for its examiners as they make sure banks are complying with the new law's requirements.
 
"These are very complicated contracts and agreements and there are many different incentives provided by networks to issuers," Milligan said, according to American Banker. "It's very difficult to say what is in and what is out from the net compensation test."
 
The Durbin amendment also restricted banks from maintaining or signing exclusive debit-processing deals with networks, requiring issuers to have agreements with at least two networks to process debit transactions for every card. Davis said that receiving and comparing proposals from different networks requires a lot of time.
 
"You're also thinking about acceptance by merchants," Davis said, American Banker reports. "Ideally you want to negotiate everything together, which is difficult given the ambiguity (of the rule)."

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