Magazine article American Banker

Banks Demand More Data from Networks in Durbin Push

Magazine article American Banker

Banks Demand More Data from Networks in Durbin Push

Article excerpt

Byline: Kate Berry

Park City, Utah a Banks are asking for more data from card networks, as they attempt to comply with new regulations capping debit card interchange fees.

Candace Davis, associate general counsel at Capital One Financial Corp., said Monday that the McLean, Va., bank has asked the card networks to make more data available on a regular basis about the transactions processed under the new fee caps.

"From internal banks' perspective, this involves a combination of bank monitoring and testing, so we can make sure the amounts [of fees per transaction] we're receiving are not greater than the amounts we're supposed to receive under the rule," Davis said Monday during a panel discussion at the American Bar Association's winter meeting of consumer financial services attorneys.

Davis said issuers "need to be comfortable" that their contracts with card networks "protect the banks."

Starting in October, new Federal Reserve Board rules capped the fees that banks can charge merchants every time their customers buy things with debit cards. The Fed capped those fees at about 24 cents per transaction, as part of the so-called Durbin amendment to the Dodd-Frank Act. Before the law regulated debit interchange fees, they had averaged about 44 cents per transaction.

The Durbin amendment is also changing the structures of business agreements between the banks that issue debit cards and the networks, including Visa Inc. and MasterCard Inc., that process debit transactions, Davis told the panel audience.

The restricted interchange levels now mean that "the structure [of a contract] can make a difference," she said, so issuers are "unpeeling the layers of these agreements in place today."

Dena Milligan, an attorney with the Federal Reserve, said the agency is in the process of developing guidance and procedures for its examiners, as they verify that banks are complying with all the Durbin requirements. …

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