A federal court has sent Reg II back to the drawing board and ruled that the Fed had ignored the plain language of the law in establishing the 21¢ + 1¢ + 5bp cap for regulated interchange. The court also struck down the 1 Signature + unaffiliated 1 PIN debit network formula per card. Legal commentary on the ruling suggests several potential outcomes.
While the courts are still determining the exact shape of any new regulations, banks may need to begin planning now for the worst-case outcome. So what should banks do to adjust for this environment? In the attached perspective, A Knockout in Round 2 of Reg II, we detail both a radical and an incremental approach to solving the problem.
