The Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA) is causing tremendous upheaval in the electronic payments industry. The law call for the U.S. Federal Reserve Board (FRB) to develop regulatory provisions that affect debit interchange rates, debit network processing, and merchant payment acceptance options. These dramatic changes will impact the business of every issuer of debit cards.
The purpose of this paper is to explain the impact of the network non-exclusivity provision of the Durbin amendment and to provide FIs with information on how to choose an alternative PIN debit network, if necessary. Because the government will soon be setting debit interchange rates, the criteria behind selecting a PIN debit network will henceforth be based less on the highest revenue potential a network can deliver for the lowest cost, and more on the best overall value that can be realized over the life of the partnership. This value is defined by a variety of benefits the network can provide, including acceptance, integrity, consistency, innovation, and relationships.