Federal Reserve Board finalizes updates to Board’s rule concerning debit card transactions

The Federal Reserve Board on Monday finalized updates to the Board’s rule concerning debit card transactions. Pursuant to statute, the updates specify that debit card issuers should enable at least two payment card networks to process all debit card transactions, including “card-not-present” transactions, such as online payments.1 The final rule is substantially similar to the proposal issued last year.

By law, the Board is required to make rules ensuring that debit card issuers give merchants the opportunity to choose between at least two unaffiliated networks when routing debit card transactions. When the Board initially issued the rule in July 2011, the market had not developed solutions to broadly support multiple networks for card-not-present debit card transactions. Since that time, technology has evolved to address these barriers. However, some debit card issuers have not yet enabled at least two unaffiliated networks for merchants to choose between when routing such transactions. This issue has become increasingly pronounced because of continued growth in online payments.

The final rule underscores that debit card issuers should enable at least two unaffiliated networks to process debit card transactions. Importantly, input received in connection with the proposal suggests that many debit card issuers, and especially most community bank issuers, are already compliant with the final rule. In response to public comments, the final rule also includes certain changes that make it easier for debit card issuers to determine whether they are in compliance with the final rule. The final rule will encourage competition between networks and incentivize them to improve their fraud-prevention capabilities.

The final rule does not modify requirements concerning interchange fees. As previously stated, the Board will continue to review interchange fee requirements in light of the most recent debit card industry cost data collected by the Board, and may propose to modify these requirements in the future.

The final rule will be effective July 1, 2023.


1. Section 1075(b)(1)(A) of the Dodd-Frank Act states that “an issuer or payment card network shall not…restrict the number of payment card networks on which [a debit card transaction] may be processed to…1 such network… .” Return to text

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