Senator Richard Durbin proposed an amendment to The Electronic Fund Transfer Act, 15 U.S.C. § 1693 et. seq., which amendment was approved by the Senate on May 13, 2010. The Electronic Fund Transfer Act is intended to establish the rights and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The amendment addresses interchange transaction fees, which are defined as any fee charged by a credit card network for the purpose of compensating a card issuer or the credit card network for its involvement in an electronic debit transaction.
The amendment requires that an interchange transaction fee charged with respect to an electronic debit transaction be reasonable and proportional to the actual cost incurred by the card issuer with respect to the transaction. The amendment requires the establishment of standards for assessing a fee’s reasonableness by:
- considering the functional similarity between electronic debit transactions and checking transactions;
- distinguishing between the actual incremental costs incurred by a credit card company for a particular credit card transaction and all other costs incurred by a credit card company which are not specific to a particular electronic debit transaction; and
- consulting with various other federal regulatory agencies, as appropriate, such as the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the Administrator of the Small Business Corporation.
However, card issuers that have less than $10,000,000,000 in assets, together with their affiliates, are exempt. The amendment also prohibits a payment card network from:
- imposing restrictions on offering discounts for use of a competing payment card network;
- imposing restrictions on offering discounts for use of other forms of payment; and
- imposing restrictions on setting transaction maximums or minimums for the acceptance of any form payment.
On May 20, 2010, the Senate passed the overriding bill, H.R. 4173?known as the Wall Street Reform and Consumer Protection Act?which incorporated this amendment, however, the Senate will now work to reconcile with the House the differences between the Senate’s version of H.R. 4173 and the House’s version of H.R. 4173.