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(Excerpts from article written in June 29, 2011)

The Federal Reserve Board on Wednesday issued a final rule establishing standards for debit card interchange fees and prohibiting network exclusivity arrangements and routing restrictions. This rule, Regulation II (Debit Card Interchange Fees and Routing), is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Debit card interchange fees are established by payment card networks and ultimately paid by merchants to debit card issuers for each electronic debit transaction. As required by the statute, the final rule establishes standards for assessing whether debit card interchange fees received by debit card issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees is effective on October 1, 2011.

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What is a card data compromise?

 A card data compromise occurs when payment card information is stolen from a merchant. Some examples of card data theft include:
  • Theft of card data from merchant receipt copies or merchant transaction information (i.e. printed batch summaries)
  • Internet hacking of card data from computer-based point of sale systems with Internet connections (common with restaurants and hotels)
  • Internet hacking of card data from e-commerce websites

There are several ways card data can be stolen; not all are computer or Internet-related. However, in the world of computers and Internet technology, thousands of technical issues make merchants vulnerable to card data theft.

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