15 USC 1693o-2 - Reasonable fees and rules for payment card transactions

U.S Code last checked for updates: Nov 22, 2024

§ 1693o–2.

Reasonable fees and rules for payment card transactions

(a)

Reasonable interchange transaction fees for electronic debit transactions

(1)

Regulatory authority over interchange transaction fees

(2)

Reasonable interchange transaction fees

(3)

Rulemaking required

(A)

In general

(B)

Information collection

(4)

Considerations; consultation

In prescribing regulations under paragraph (3)(A), the Board shall—

(A)

consider the functional similarity between—

(i)

electronic debit transactions; and

(ii)

checking transactions that are required within the Federal Reserve bank system to clear at par;

(B)

distinguish between—

(i)

the incremental cost incurred by an issuer for the role of the issuer in the authorization, clearance, or settlement of a particular electronic debit transaction, which cost shall be considered under paragraph (2); and

(ii)

other costs incurred by an issuer which are not specific to a particular electronic debit transaction, which costs shall not be considered under paragraph (2); and

(C)

consult, as appropriate, with the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, the National Credit Union Administration Board, the Administrator of the Small Business Administration, and the Director of the Bureau of Consumer Financial Protection.

(5)

Adjustments to interchange transaction fees for fraud prevention costs

(A)

Adjustments

The Board may allow for an adjustment to the fee amount received or charged by an issuer under paragraph (2), if—

(i)

such adjustment is reasonably necessary to make allowance for costs incurred by the issuer in preventing fraud in relation to electronic debit transactions involving that issuer; and

(ii)

the issuer complies with the fraud-related standards established by the Board under subparagraph (B), which standards shall—

(I)

be designed to ensure that any fraud-related adjustment of the issuer is limited to the amount described in clause (i) and takes into account any fraud-related reimbursements (including amounts from charge-backs) received from consumers, merchants, or payment card networks in relation to electronic debit transactions involving the issuer; and

(II)

require issuers to take effective steps to reduce the occurrence of, and costs from, fraud in relation to electronic debit transactions, including through the development and implementation of cost-effective fraud prevention technology.

(B)

Rulemaking required

(i)

In general

(ii)

Factors for consideration

In issuing the standards and prescribing regulations under this paragraph, the Board shall consider—

(I)

the nature, type, and occurrence of fraud in electronic debit transactions;

(II)

the extent to which the occurrence of fraud depends on whether authorization in an electronic debit transaction is based on signature, PIN, or other means;

(III)

the available and economical means by which fraud on electronic debit transactions may be reduced;

(IV)

the fraud prevention and data security costs expended by each party involved in electronic debit transactions (including consumers, persons who accept debit cards as a form of payment, financial institutions, retailers and payment card networks);

(V)

the costs of fraudulent transactions absorbed by each party involved in such transactions (including consumers, persons who accept debit cards as a form of payment, financial institutions, retailers and payment card networks);

(VI)

the extent to which interchange transaction fees have in the past reduced or increased incentives for parties involved in electronic debit transactions to reduce fraud on such transactions; and

(VII)

such other factors as the Board considers appropriate.

(6)

Exemption for small issuers

(A)

In general

(B)

Definition

(7)

Exemption for government-administered payment programs and reloadable prepaid cards

(A)

In general

This subsection shall not apply to an interchange transaction fee charged or received with respect to an electronic debit transaction in which a person uses—

(i)

a debit card or general-use prepaid card that has been provided to a person pursuant to a Federal, State or local government-administered payment program, in which the person may only use the debit card or general-use prepaid card to transfer or debit funds, monetary value, or other assets that have been provided pursuant to such program; or

(ii)

a plastic card, payment code, or device that is—

(I)

linked to funds, monetary value, or assets which are purchased or loaded on a prepaid basis;

(II)

not issued or approved for use to access or debit any account held by or for the benefit of the card holder (other than a subaccount or other method of recording or tracking funds purchased or loaded on the card on a prepaid basis);

(III)

redeemable at multiple, unaffiliated merchants or service providers, or automated teller machines;

(IV)

used to transfer or debit funds, monetary value, or other assets; and

(V)

reloadable and not marketed or labeled as a gift card or gift certificate.

(B)

Exception

Notwithstanding subparagraph (A), after the end of the 1-year period beginning on the effective date provided in paragraph (9), this subsection shall apply to an interchange transaction fee charged or received with respect to an electronic debit transaction described in subparagraph (A)(i) in which a person uses a general-use prepaid card, or an electronic debit transaction described in subparagraph (A)(ii), if any of the following fees may be charged to a person with respect to the card:

(i)

A fee for an overdraft, including a shortage of funds or a transaction processed for an amount exceeding the account balance.

(ii)

A fee imposed by the issuer for the first withdrawal per month from an automated teller machine that is part of the issuer’s designated automated teller machine network.

(C)

Definition

For purposes of subparagraph (B), the term “designated automated teller machine network” means either—

(i)

all automated teller machines identified in the name of the issuer; or

(ii)

any network of automated teller machines identified by the issuer that provides reasonable and convenient access to the issuer’s customers.

(D)

Reporting

Beginning 12 months after July 21, 2010, the Board shall annually provide a report to the Congress regarding —

(i)

the prevalence of the use of general-use prepaid cards in Federal, State or local government-administered payment programs; and

(ii)

the interchange transaction fees and cardholder fees charged with respect to the use of such general-use prepaid cards.

(8)

Regulatory authority over network fees

(A)

In general

(B)

Limitation

The authority under subparagraph (A) to prescribe regulations shall be limited to regulations to ensure that—

(i)

a network fee is not used to directly or indirectly compensate an issuer with respect to an electronic debit transaction; and

(ii)

a network fee is not used to circumvent or evade the restrictions of this subsection and regulations prescribed under such subsection.

(C)

Rulemaking required

(9)

Effective date

(b)

Limitation on payment card network restrictions

(1)

Prohibitions against exclusivity arrangements

(A)

No exclusive network

The Board shall, before the end of the 1-year period beginning on July 21, 2010, prescribe regulations providing that an issuer or payment card network shall not directly or through any agent, processor, or licensed member of a payment card network, by contract, requirement, condition, penalty, or otherwise, restrict the number of payment card networks on which an electronic debit transaction may be processed to—

(i)

1 such network; or

(ii)

2 or more such networks which are owned, controlled, or otherwise operated by —

(I)

affiliated persons; or

(II)

networks affiliated with such issuer.

(B)

No routing restrictions

(2)

Limitation on restrictions on offering discounts for use of a form of payment

(A)

In general

A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to provide a discount or in-kind incentive for payment by the use of cash, checks, debit cards, or credit cards to the extent that—

(i)

in the case of a discount or in-kind incentive for payment by the use of debit cards, the discount or in-kind incentive does not differentiate on the basis of the issuer or the payment card network;

(ii)

in the case of a discount or in-kind incentive for payment by the use of credit cards, the discount or in-kind incentive does not differentiate on the basis of the issuer or the payment card network; and

(iii)

to the extent required by Federal law and applicable State law, such discount or in-kind incentive is offered to all prospective buyers and disclosed clearly and conspicuously.

(B)

Lawful discounts

(3)

Limitation on restrictions on setting transaction minimums or maximums

(A)

In general

A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability—

(i)

of any person to set a minimum dollar value for the acceptance by that person of credit cards, to the extent that—

(I)

such minimum dollar value does not differentiate between issuers or between payment card networks; and

(II)

such minimum dollar value does not exceed $10.00; or

(ii)

of any Federal agency or institution of higher education to set a maximum dollar value for the acceptance by that Federal agency or institution of higher education of credit cards, to the extent that such maximum dollar value does not differentiate between issuers or between payment card networks.

(B)

Increase in minimum dollar amount

(4)

Rule of construction

No provision of this subsection shall be construed to authorize any person—

(A)

to discriminate between debit cards within a payment card network on the basis of the issuer that issued the debit card; or

(B)

to discriminate between credit cards within a payment card network on the basis of the issuer that issued the credit card.

(c)

Definitions

For purposes of this section, the following definitions shall apply:

(1)

Affiliate

(2)

Debit card

The term “debit card”—

(A)

means any card, or other payment code or device, issued or approved for use through a payment card network to debit an asset account (regardless of the purpose for which the account is established), whether authorization is based on signature, PIN, or other means;

(B)

includes a general-use prepaid card, as that term is defined in section 1693l–1(a)(2)(A) of this title; and

(C)

does not include paper checks.

(3)

Credit card

(4)

Discount

The term “discount”—

(A)

means a reduction made from the price that customers are informed is the regular price; and

(B)

does not include any means of increasing the price that customers are informed is the regular price.

(5)

Electronic debit transaction

(6)

Federal agency

The term “Federal agency” means—

(A)

an agency (as defined in section 101 of title 31); and

(B)

a Government corporation (as defined in section 103 of title 5).

(7)

Institution of higher education

(8)

Interchange transaction fee

(9)

Issuer

(10)

Network fee

(11)

Payment card network

(d)

Enforcement

(1)

In general

(2)

Exception

(Pub. L. 90–321, title IX, § 920, as added Pub. L. 111–203, title X, § 1075(a)(2), July 21, 2010, 124 Stat. 2068.)

cite as: 15 USC 1693o-2