Debit ruling should jumpstart EMV conversion plans

by. Brandon Kuehl

In March, a federal appeals court overturned a lower court’s 2013 decision that would have rewritten the Federal Reserve’s rule for implementing the Durbin Amendment. The March 21 ruling from a three-judge panel said the central bank’s rules “generally rest on reasonable constructions of the statute.” This ruling upheld the current 21-cent debit swipe fee.

Most analysts agree the court’s ruling should be a shot in the arm for credit unions’ and community banks’ EMV conversion plans. That’s because many had taken a “wait and see” approach to debit EMV, pending the court’s ruling. Although plans to convert to EMV on the credit side had been moving forward, some financial institutions (FIs) had suspended their debit EMV conversions. This was at least partially due to the ongoing court debate muddying the waters regarding the number of unaffiliated networks required for debit routing.

If the federal appeals court had upheld the lower court’s July 2013 ruling, the additional routing networks required would have led to increased cost for FIs. Needless to say, FI cards teams and their processing partners were closely monitoring all legal action concerning the debit ruling debate.

As our VP of Sales Brian Scott pointed out in a recent Credit Union Journal article: “This decision helps to almost green light converting debit to EMV. People who have been sitting and waiting are starting to get going on the debit side now. I think you will start to see processors, like TMG, really begin to pick up their work around debit EMV.”

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