The Fed adds new debit card FAQs

The Federal Reserve added 10 additional frequently asked questions regarding Regulation II: Debit Card Interchange Fees and Routing to a consolidated document that now consists of 24 clarifications to the final rule.

The changes were added on Oct. 24.

Included in the new set of FAQs is a description of an obligation of a large non-exempt issuer that acquires a small exempt issuer that has circulating debit cards.

According to the American Bankers Association, the Fed expects the larger issuer to convert the previously exempt cards with reasonable amount of time. The rule states that the conversation must occur generally no later than 30 days after the acquisition.

Another FAQ clarified whether a card is considered “in exchange for payment” or not. According to the new language, a card is “in exchange for payment” if a cardholder or other person provides funds to load on the card. In order to meet the “in exchange for payment” standard, the issuer or program manager does not need to charge an additional fee for issuance of the card.

The Fed also said that general-use prepaid cards do not qualify for the exemption in section 235.5 ©, which is the prepaid card exemption if the cardholders are able of authorizing the issuer to pay third parties with funds underlying the card through the issuer’s online card or account management system.

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