NGA Applauds Federal Reserve’s Proposed Changes to Protect Merchant Routing on Card-Not-Present Debit Transactions

May 7, 2021

Washington, D.C. – The National Grocers Association (NGA), the trade association representing the independent supermarket industry, applauds the Federal Reserve’s proposed changes to its requirements on debit card issuers to better protect merchants’ ability to route card-not-present (CNP) debit transactions.

The Board of Governors of the Federal Reserve today announced proposed changes to the agency’s Regulation II rules to clarify that debit card issuers must enable at least two unaffiliated networks. Since the implementation of Regulation II following the passage of the Durbin Amendment in 2010’s Dodd-Frank Act, many merchants have cited their inability to route online and other CNP debit transactions over a network of their choice. Today’s notice of the proposed changes allows for public comment. NGA intends to provide comments in support of the rule.

“Today’s announcement from the Fed is a win for our members, but there’s still work to be done,” said Robert Yeakel, NGA’s director of government relations. “We have been raising this routing problem to the agency for years. However, the Fed’s announcement today is unfortunately mum on the larger debit issue at hand: the need for the agency to update and decrease the debit fee rate. As a result, merchants continue to pay debit swipe fees that are significantly higher than the costs that issuers incur to actually process a debit transaction.”

Included in today’s announcement from the Federal Reserve was a release of its long-awaited 2019 Debit Issuer Survey. This biannual survey conducted by the Fed of debit card issuers includes data from U.S. issuers as to the volume and costs that come with debit card transactions, including fraud. The 2019 survey shows that the current regulated debit interchange rate that merchants pay – $0.21 plus 5 basis points times the value of the transaction – is more than five times higher than the average per-transaction issuer cost of $0.039.

The Federal Reserve announcement, proposed changes to Regulation II and 2019 Debit Issuer Survey can be viewed here: