Fed Q&A Interprets Durbin Amendment Routing on EMV

The Federal Reserve indicated on Wednesday that under the Durbin Amendment, card networks cannot require merchants to allow debit cardholders to choose EMV chip application when one application routes to a single network. The agency’s view was expressed through a new Q&A on the Fed’s Regulation II frequently asked questions page.

“A payment card network inhibits a merchant’s ability to route electronic debit card transactions if it, by network rules, standards, specifications, contractual agreements, or otherwise, requires the merchant to allow the cardholder to make the choice of EMV chip application on a debit card, where one application routes only to a single network,” the Fed said. “Such a requirement is not compliant with section 235.7 of Regulation II because it prevents the merchant from directing the routing of electronic debit transactions.”

By limiting consumers’ choice of routing at the point of sale, this interpretation of the Durbin Amendment could push more debit transactions to be processed as PIN transactions rather than via signatures. For more information, contact ABA’s Jess Sharp.