II 

112TH CONGRESS 

1ST SESSION S. 575 

To study the market and appropriate regulatory structure for electronic 

debit card transactions, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 15, 2011 

Mr. TESTER (for himself, Mr. CORKER, Mr. CARPER, Mr. ROBERTS, Mr. 

COONS, Mr. LEE, Mr. NELSON of Nebraska, Mr. KYL, Mr. TOOMEY, Mr. 

THUNE, and Mr. COBURN) introduced the following bill; which was read 

twice and referred to the Committee on Banking, Housing, and Urban 

Affairs 

A BILL 

To study the market and appropriate regulatory structure 

for electronic debit card transactions, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Debit Interchange Fee 

5 Study Act of 2011’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 

8 (1) in response to the proposed debit inter9 change rule of the Board of Governors of the FedVerDate Mar 15 2010 02:55 Mar 16, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S575.IS S575

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1 eral Reserve System mandated by section 1075 of 

2 the Dodd-Frank Wall Street Reform and Consumer 

3 Protection Act, the Chairman of Board, the Comp4 troller of the Currency, the Chairperson of the Fed5 eral Deposit Insurance Corporation, and the Chair6 man of the National Credit Union Administration 

7 Board have publicly raised concerns about the im8 pact of the proposed rule; 

9 (2) while testifying before the Committee on 

10 Banking, Housing, and Urban Affairs of the Senate 

11 on February 17, 2011, the Chairman of the Board 

12 stated in response to questions about the small bank 

13 exemption to the interchange rule, ‘‘. . . there is 

14 some risk that the exemption will not be effective 

15 and that the interchange fees available through 

16 smaller institutions will be reduced to the same ex17 tent we would see for larger banks’’; 

18 (3) the Acting Comptroller of the Currency, in 

19 comments to the Board, cited safety and soundness 

20 concerns and stated, ‘‘. . . we believe the proposal 

21 takes an unnecessarily narrow approach to recovery 

22 of costs that would be allowable under the law and 

23 that are recognized and indisputably part of con24 ducting a debit card business. This has long-term 


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1 safety and soundness consequences—for banks of all 

2 sizes . . .’’; 

3 (4) the chairperson of the Federal Deposit In4 surance Corporation stated in comments to the 

5 Board regarding the proposed rule their concern 

6 that the small bank exemption would not work, stat7 ing, ‘‘. . . we are concerned that these institutions 

8 may not actually receive the benefit of the inter9 change fee limit exemption explicitly provided by 

10 Congress, resulting in a loss of income for commu11 nity banks and ultimately higher banking costs for 

12 their customers’’; 

13 (5) the chairman of the National Credit Union 

14 Administration Board, in comments to the Board, 

15 cited concern with making sure there are ‘‘meaning16 ful exemptions for smaller card issuers’’; and 

17 (6) all of the comments and concerns raised by 

18 the banking and credit union regulatory agencies 

19 cast serious questions about the practical implemen20 tation of section 1075 of the Dodd-Frank Wall 

21 Street Reform and Consumer Protection Act, and 

22 further study and consideration are needed. 

23 SEC. 3. RULEMAKING AND EFFECTIVE DATES. 

24 (a) EXTENSION FOR RULEMAKING TIMELINES AND

25 REVISED EFFECTIVE DATE.—Section 920 of the ElecVerDate Mar 15 2010 02:55 Mar 16, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S575.IS S575

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1 tronic Fund Transfer Act (15 U.S.C. 1693o–2) is amend2 ed— 

3 (1) in subsection (a)(3)(A), by striking ‘‘9 

4 months after the date of enactment of the Consumer 

5 Financial Protection Act of 2010’’ and inserting ‘‘24 

6 months after the date of enactment of the Debit 

7 Interchange Fee Study Act of 2011’’; 

8 (2) in subsection (a)(5)(B)(i), by striking ‘‘9 

9 months after the date of enactment of the Consumer 

10 Financial Protection Act of 2010’’ and inserting ‘‘24 

11 months after the date of enactment of the Debit 

12 Interchange Fee Study Act of 2011’’; 

13 (3) in subsection (a)(8)(C), by striking ‘‘9- 

14 month period beginning on the date of the enact15 ment of the Consumer Financial Protection Act of 

16 2010’’ and inserting ‘‘24-month period beginning on 

17 the date of enactment of the Debit Interchange Fee 

18 Study Act of 2011’’; 

19 (4) in subsection (a)(9), by striking ‘‘12-month 

20 period beginning on the date of the enactment of the 

21 Consumer Financial Protection Act of 2010’’ and in22 serting ‘‘30-month period beginning on the date of 

23 enactment of the Debit Interchange Fee Study Act 

24 of 2011’’; 


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1 (5) in subsection (b)(1)(A), by striking ‘‘1-year 

2 period beginning on the date of the enactment of the 

3 Consumer Financial Protection Act of 2010’’ and in4 serting ‘‘24-month period beginning on the date of 

5 enactment of the Debit Interchange Fee Study Act 

6 of 2011’’; and 

7 (6) in subsection (b)(1)(B), by striking ‘‘1-year 

8 period beginning on the date of the enactment of the 

9 Consumer Financial Protection Act of 2010’’ and in10 serting ‘‘24-month period beginning on the date of 

11 enactment of the Debit Interchange Fee Study Act 

12 of 2011’’. 

13 (b) EARLIER RULEMAKING VOIDED; NEW RULE14 MAKING REQUIRED.—Any regulation proposed or pre15 scribed by the Board pursuant to section 920 of the Elec16 tronic Fund Transfer Act (as amended by the Dodd17 Frank Wall Street Reform and Consumer Protection Act) 

18 prior to the date that is 6 months after the date of comple19 tion of the study required under section 4 shall be with20 drawn by the Board and shall have no legal effect. 

21 SEC. 4. STUDY. 

22 (a) STUDY REQUIRED.—Not later than 12 months 

23 after the date of enactment of this Act, the study agencies 

24 shall jointly submit a report to the Committee on Banking, 

25 Housing, and Urban Affairs of the Senate and the ComVerDate Mar 15 2010 02:55 Mar 16, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S575.IS S575

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1 mittee on Financial Services of the House of Representa2 tives regarding the impact of regulating debit interchange 

3 transaction fees and related issues under section 920 of 

4 the Electronic Fund Transfer Act. 

5 (b) SUBJECTS FOR REVIEW.—In conducting the 

6 study required by this section, the study agencies shall ex7 amine the state of the debit interchange payment system, 

8 including the impact of section 920 of the Electronic Fund 

9 Transfer Act on consumers, entities that accept debit 

10 cards as payment, all financial institutions that issue debit 

11 cards, including small issuers, and debit card networks, 

12 and shall specifically examine— 

13 (1) the costs and benefits of electronic debit 

14 card transactions and alternative forms of payment, 

15 including cash, check, and automated clearing house 

16 (ACH) for consumers, merchants, issuers, and debit 

17 card networks, including— 

18 (A) individual consumer protections, ease 

19 of acceptance, payment guarantee, and security 

20 provided through such forms of payments for 

21 consumers; 

22 (B) costs and benefits associated with ac23 ceptance, handling, and processing of different 

24 forms of payments, including labor, security, 

25 verification, and collection where applicable; 


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1 (C) the extent to which payment form im2 pacts incremental sales and ticket sizes for mer3 chants; 

4 (D) all direct and indirect costs associated 

5 with fraud prevention, detection, and mitiga6 tion, including data breach and identity theft, 

7 and the overall costs of fraud incurred by debit 

8 card issuers and merchants, and how those 

9 costs are distributed among those parties; and 

10 (E) financial liability and payment guar11 antee for debit card transactions and associated 

12 risks and costs incurred by debit card issuers 

13 and merchants, and how those costs are distrib14 uted among those parties; 

15 (2) the structure of the current debit inter16 change system, including— 

17 (A) the extent to which the current struc18 ture offers merchants and issuers, particularly 

19 smaller merchants and issuers sufficient com20 petitive opportunities to participate and nego21 tiate in the debit interchange system; 

22 (B) an examination of the benefits of al23 lowing interchange fees to be determined in bi24 lateral negotiations between merchants and 

25 issuers, including small issuers directly; 


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1 (C) mechanisms for allowing more price 

2 discovery and transparency on the part of the 

3 consumer; and 

4 (D) the ability of new competitors to enter 

5 the payment systems market and an examina6 tion into whether structural barriers to entry 

7 exist; and 

8 (3) the impact of the proposed rule reducing 

9 debit card interchange fees issued by the Board enti10 tled, ‘‘Debit Card Interchange Fees and Routing’’ 

11 (75 Fed. Reg. 81,722 (Dec. 28, 2010)), if such pro12 posed rule were adopted without change, including— 

13 (A) the impact on consumers, including 

14 whether consumers would benefit from reduced 

15 interchanges fees through reduced retail prices; 

16 (B) the impact on lower and moderate in17 come consumers and on small businesses with 

18 respect to the cost and accessibility of payment 

19 accounts and services, the availability of credit, 

20 and what alternative forms of financing are 

21 available and the cost of such financing; 

22 (C) the impact on consumer protection, in23 cluding anti-fraud, customer identification ef24 forts, and privacy protection; 


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1 (D) the impact of reduced debit card inter2 change fees on merchants, including a compari3 son of the impact on small merchants versus 

4 large merchants; 

5 (E) the potential consequences to mer6 chants if reduced debit interchange fees result 

7 in elimination of the payment guarantee or 

8 other reductions in debit card services to mer9 chants or shift consumers to other forms of 

10 payments; 

11 (F) the impact of significantly reduced 

12 debit card interchange fees on debit card 

13 issuers and the services and rates they provide, 

14 if fees do not adequately recoup costs and in15 vestments made by issuers and the potential 

16 impact on the safety and soundness of issuers; 

17 (G) whether it is possible to exempt or 

18 treat differently a certain class of issuers within 

19 the debit interchange system, such as small 

20 issuers and the impact of market forces on such 

21 treatment; 

22 (H) the extent to which a transition to a 

23 fee cap from an interchange fee that is propor24 tional to the overall cost of a transaction could 


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1 provide a reasonable rate of return for issuers 

2 and adequately cover fraud and related costs; 

3 (I) the impact on other entities that utilize 

4 debit card transactions, including the debit card 

5 programs of Federal and State entities; 

6 (J) the impact of shifting debit transaction 

7 routing from card issuers to merchants, includ8 ing resulting changes to interchange fees and 

9 costs for card issuers; and 

10 (K) the impact of mandating a specific 

11 number of enabled networks on merchants and 

12 debit card issuers, including the specific and 

13 unique impact on small issuers. 

14 SEC. 5. DEFINITIONS. 

15 For purposes of this Act, the following definitions 

16 shall apply: 

17 (1) BOARD.—The term ‘‘Board’’ means the 

18 Board of Governors of the Federal Reserve System. 

19 (2) STUDY AGENCIES.—The term ‘‘study agen20 cies’’ means the Board, the Office of the Comptroller 

21 of the Currency, the Federal Deposit Insurance Cor22 poration, and the National Credit Union Administra23 tion. 

24 (3) SMALL ISSUERS.—The term ‘‘small issuers’’ 

25 means debit card issuers that are depository instituVerDate Mar 15 2010 03:52 Mar 16, 2011 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S575.IS S575

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1 tions, including community banks and credit unions, 

2 with assets of less than $10,000,000,000. 

Æ 


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