ABA and four other financial trade associations sent a letter to the Federal Reserve last week seeking an 18-month extension for the effective date of a recent final rule expanding Regulation II (the implementing regulation for the Durbin Amendment). The groups urged the agency to push the deadline for this debit card mandate to January 1, 2025.
The new rule applies to all banks and extends the mandate that debit card transactions be processed on at least two unaffiliated payment card network to card-not-present transactions (online and internet purchases). ABA and a coalition of financial trades vigorously opposed the Fed’s proposed rule and criticized its finalization.
In last week’s letter, the groups raised concerns that the current effective date of July 1, 2023, does not provide sufficient time for financial institutions—especially community banks and credit unions—to comply, given the extensive changes to core banking systems and payments infrastructure that the rule requires. “The rushed timeline for these efforts will create unintentional negative consequences for consumers while banks and credit unions are forced to reprioritize implementation of the final rule over other consumer-oriented and security-focused improvement,” the groups said.
Federal Reserve Governor Michelle Bowman—who voted against the final rule and issued a dissenting statement—echoed those concerns during a conversation with ABA President and CEO Rob Nichols during ABA’s Conference for Community Bankers today. “What’s important is that as community banks are working toward the implementation of the requirements of this updated Reg II rule, that you let us know where you’re finding pain points—if you’re finding operational challenges or things that are leading to delays or additional expenses—and that you share that with us throughout the process. . . . I think it is rare that deadlines for implementation are extended, but it certainly is helpful for us to consider along the way any challenges you might be having so we can be fully informed of the environment.”