On July 31, 2013 the U.S. District Court ruled in favor of the retailers in their suit against the Federal Reserve regarding the rules adopted to implement the Durbin Amendment. The Federal Reserve now has two options. They can either revise their rules or appeal the court’s decision.
“The ATM industry is dealing with mostly small, indirect negative effects from the Durbin amendment and the manner in which the Federal Reserve implemented it,” says Bryan Bauer, President of Kahuna ATM Solutions. “It is widely acknowledged that Durbin has contributed to the delayed development of a common US AID for EMV which puts ATM operators of all sizes in an untenable position to meet liability shifts with networks. Implementation of Durbin was also ‘not positive’ for the ATM industry because the Federal Reserve failed to put in place the two unaffiliated bugs for PIN debit and two for signature debit in the first place.” Bauer is referring to the Fed’s interpretation and implementation where it said two total networks, one for PIN and one for Signature, was enough.
“It is important to note that the recent court ruling only speaks to capping interchange paid by merchants to the banks and does not directly address interchange payments made by the banks to ATM providers. Nonetheless, an indirect but important result of the court’s decision for the ATM industry may be further delays in adoption of a comprehensive U.S. AID specification for EMV,” says Bruce Renard, Executive Director of the National ATM Council, Inc. “Should the court ruling withstand appeal, it would appear to require adoption of new rules by the Fed mandating two unaffiliated bugs for PIN debit. This is the treatment NAC originally sought during the Fed’s rule-making to implement Durbin, and it would be a very positive development for both consumers and the ATM sector as a whole; specifically for those organizations who perform more transactions as an acquirer than as an issuer.”
A hearing date has been set for August 14, 2013 to consider the timing of new Fed rules and the possible need for interim rules. Kahuna ATM Solutions, Bauer says, will continue to monitor the situation as it progresses.