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.
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.