A bill to study the market and appropriate regulatory structure for electronic debit card transactions, and for other purposes.

Summary: Debit Interchange Fee Study Act of 2011 - Amends the Electronic Fund Transfer Act to extend from 9 months after the date of enactment of the Consumer Financial Protection Act of 2010 to 24 months after the date of enactment of this Act the rulemaking timelines and effective dates for the proposed debit interchange (swipe) rule of the Board of Governors of the Federal Reserve System (Board) that is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Declares void and without legal effect any regulation proposed or prescribed by the Board pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act before the date that is 6 months after completion of the study required by this Act.

Directs specified banking regulatory agencies (study agencies) to study jointly and report to certain congressional committees regarding the impact of regulating debit interchange transaction (swipe) fees and related issues under the Electronic Fund Transfer Act. Prescribes study contents including the costs and benefits of electronic debit card transactions (EDTs) and alternative forms of payment, including cash, check, and automated clearing house (ACH) for consumers, merchants, issuers, and debit card networks.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Debit Interchange Fee Study Act of 
2011''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) in response to the proposed debit interchange rule of 
        the Board of Governors of the Federal Reserve System mandated 
        by section 1075 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act, the Chairman of Board, the Comptroller 
        of the Currency, the Chairperson of the Federal Deposit 
        Insurance Corporation, and the Chairman of the National Credit 
        Union Administration Board have publicly raised concerns about 
        the impact of the proposed rule;
            (2) while testifying before the Committee on Banking, 
        Housing, and Urban Affairs of the Senate on February 17, 2011, 
        the Chairman of the Board stated in response to questions about 
        the small bank exemption to the interchange rule, ``. . . there 
        is some risk that the exemption will not be effective and that 
        the interchange fees available through smaller institutions 
        will be reduced to the same extent we would see for larger 
        banks'';
            (3) the Acting Comptroller of the Currency, in comments to 
        the Board, cited safety and soundness concerns and stated, ``. 
        . . we believe the proposal takes an unnecessarily narrow 
        approach to recovery of costs that would be allowable under the 
        law and that are recognized and indisputably part of conducting 
        a debit card business. This has long-term safety and soundness 
        consequences--for banks of all sizes . . .'';
            (4) the chairperson of the Federal Deposit Insurance 
        Corporation stated in comments to the Board regarding the 
        proposed rule their concern that the small bank exemption would 
        not work, stating, ``. . . we are concerned that these 
        institutions may not actually receive the benefit of the 
        interchange fee limit exemption explicitly provided by 
        Congress, resulting in a loss of income for community banks and 
        ultimately higher banking costs for their customers'';
            (5) the chairman of the National Credit Union 
        Administration Board, in comments to the Board, cited concern 
        with making sure there are ``meaningful exemptions for smaller 
        card issuers''; and
            (6) all of the comments and concerns raised by the banking 
        and credit union regulatory agencies cast serious questions 
        about the practical implementation of section 1075 of the Dodd-
        Frank Wall Street Reform and Consumer Protection Act, and 
        further study and consideration are needed.

SEC. 3. RULEMAKING AND EFFECTIVE DATES.

    (a) Extension for Rulemaking Timelines and Revised Effective 
Date.--Section 920 of the Electronic Fund Transfer Act (15 U.S.C. 
1693o-2) is amended--
            (1) in subsection (a)(3)(A), by striking ``9 months after 
        the date of enactment of the Consumer Financial Protection Act 
        of 2010'' and inserting ``24 months after the date of enactment 
        of the Debit Interchange Fee Study Act of 2011'';
            (2) in subsection (a)(5)(B)(i), by striking ``9 months 
        after the date of enactment of the Consumer Financial 
        Protection Act of 2010'' and inserting ``24 months after the 
        date of enactment of the Debit Interchange Fee Study Act of 
        2011'';
            (3) in subsection (a)(8)(C), by striking ``9-month period 
        beginning on the date of the enactment of the Consumer 
        Financial Protection Act of 2010'' and inserting ``24-month 
        period beginning on the date of enactment of the Debit 
        Interchange Fee Study Act of 2011'';
            (4) in subsection (a)(9), by striking ``12-month period 
        beginning on the date of the enactment of the Consumer 
        Financial Protection Act of 2010'' and inserting ``30-month 
        period beginning on the date of enactment of the Debit 
        Interchange Fee Study Act of 2011'';
            (5) in subsection (b)(1)(A), by striking ``1-year period 
        beginning on the date of the enactment of the Consumer 
        Financial Protection Act of 2010'' and inserting ``24-month 
        period beginning on the date of enactment of the Debit 
        Interchange Fee Study Act of 2011''; and
            (6) in subsection (b)(1)(B), by striking ``1-year period 
        beginning on the date of the enactment of the Consumer 
        Financial Protection Act of 2010'' and inserting ``24-month 
        period beginning on the date of enactment of the Debit 
        Interchange Fee Study Act of 2011''.
    (b) Earlier Rulemaking Voided; New Rulemaking Required.--Any 
regulation proposed or prescribed by the Board pursuant to section 920 
of the Electronic Fund Transfer Act (as amended by the Dodd-Frank Wall 
Street Reform and Consumer Protection Act) prior to the date that is 6 
months after the date of completion of the study required under section 
4 shall be withdrawn by the Board and shall have no legal effect.

SEC. 4. STUDY.

    (a) Study Required.--Not later than 12 months after the date of 
enactment of this Act, the study agencies shall jointly submit a report 
to the Committee on Banking, Housing, and Urban Affairs of the Senate 
and the Committee on Financial Services of the House of Representatives 
regarding the impact of regulating debit interchange transaction fees 
and related issues under section 920 of the Electronic Fund Transfer 
Act.
    (b) Subjects for Review.--In conducting the study required by this 
section, the study agencies shall examine the state of the debit 
interchange payment system, including the impact of section 920 of the 
Electronic Fund Transfer Act on consumers, entities that accept debit 
cards as payment, all financial institutions that issue debit cards, 
including small issuers, and debit card networks, and shall 
specifically examine--
            (1) the costs and benefits of electronic debit card 
        transactions and alternative forms of payment, including cash, 
        check, and automated clearing house (ACH) for consumers, 
        merchants, issuers, and debit card networks, including--
                    (A) individual consumer protections, ease of 
                acceptance, payment guarantee, and security provided 
                through such forms of payments for consumers;
                    (B) costs and benefits associated with acceptance, 
                handling, and processing of different forms of 
                payments, including labor, security, verification, and 
                collection where applicable;
                    (C) the extent to which payment form impacts 
                incremental sales and ticket sizes for merchants;
                    (D) all direct and indirect costs associated with 
                fraud prevention, detection, and mitigation, including 
                data breach and identity theft, and the overall costs 
                of fraud incurred by debit card issuers and merchants, 
                and how those costs are distributed among those 
                parties; and
                    (E) financial liability and payment guarantee for 
                debit card transactions and associated risks and costs 
                incurred by debit card issuers and merchants, and how 
                those costs are distributed among those parties;
            (2) the structure of the current debit interchange system, 
        including--
                    (A) the extent to which the current structure 
                offers merchants and issuers, particularly smaller 
                merchants and issuers sufficient competitive 
                opportunities to participate and negotiate in the debit 
                interchange system;
                    (B) an examination of the benefits of allowing 
                interchange fees to be determined in bilateral 
                negotiations between merchants and issuers, including 
                small issuers directly;
                    (C) mechanisms for allowing more price discovery 
                and transparency on the part of the consumer; and
                    (D) the ability of new competitors to enter the 
                payment systems market and an examination into whether 
                structural barriers to entry exist; and
            (3) the impact of the proposed rule reducing debit card 
        interchange fees issued by the Board entitled, ``Debit Card 
        Interchange Fees and Routing'' (75 Fed. Reg. 81,722 (Dec. 28, 
        2010)), if such proposed rule were adopted without change, 
        including--
                    (A) the impact on consumers, including whether 
                consumers would benefit from reduced interchanges fees 
                through reduced retail prices;
                    (B) the impact on lower and moderate income 
                consumers and on small businesses with respect to the 
                cost and accessibility of payment accounts and 
                services, the availability of credit, and what 
                alternative forms of financing are available and the 
                cost of such financing;
                    (C) the impact on consumer protection, including 
                anti-fraud, customer identification efforts, and 
                privacy protection;
                    (D) the impact of reduced debit card interchange 
                fees on merchants, including a comparison of the impact 
                on small merchants versus large merchants;
                    (E) the potential consequences to merchants if 
                reduced debit interchange fees result in elimination of 
                the payment guarantee or other reductions in debit card 
                services to merchants or shift consumers to other forms 
                of payments;
                    (F) the impact of significantly reduced debit card 
                interchange fees on debit card issuers and the services 
                and rates they provide, if fees do not adequately 
                recoup costs and investments made by issuers and the 
                potential impact on the safety and soundness of 
                issuers;
                    (G) whether it is possible to exempt or treat 
                differently a certain class of issuers within the debit 
                interchange system, such as small issuers and the 
                impact of market forces on such treatment;
                    (H) the extent to which a transition to a fee cap 
                from an interchange fee that is proportional to the 
                overall cost of a transaction could provide a 
                reasonable rate of return for issuers and adequately 
                cover fraud and related costs;
                    (I) the impact on other entities that utilize debit 
                card transactions, including the debit card programs of 
                Federal and State entities;
                    (J) the impact of shifting debit transaction 
                routing from card issuers to merchants, including 
                resulting changes to interchange fees and costs for 
                card issuers; and
                    (K) the impact of mandating a specific number of 
                enabled networks on merchants and debit card issuers, 
                including the specific and unique impact on small 
                issuers.

SEC. 5. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (2) Study agencies.--The term ``study agencies'' means the 
        Board, the Office of the Comptroller of the Currency, the 
        Federal Deposit Insurance Corporation, and the National Credit 
        Union Administration.
            (3) Small issuers.--The term ``small issuers'' means debit 
        card issuers that are depository institutions, including 
        community banks and credit unions, with assets of less than 
        $10,000,000,000.