Card executives are pondering how to implement part of the regulatory reform bill that would exempt some cards from the proposed debit interchange regulations.
"There are ways to do it, but none of them are easy," said Linda Perry, a former Visa Inc. executive who is now an independent consultant. The people who crafted the bill's amendment that includes the exemption "didn't really think it through," she said. "I'm sure the networks are lobbying and saying, 'There are these logistical issues, such as how do you enforce these rules?' "
The bill would authorize the Federal Reserve to regulate debit interchange fees, but some prepaid cards and cards from issuers with less than $10 billion in assets are exempt.
One option would be to require issuers to note whether they are exempt on their cards, she said. Another would be to enable processors to identify exempt issuers using their cards' bank identification numbers.
Perry believes identifying exempt cards using BINs would be possible, but it would be "extremely difficult based on the current BIN structure." Many issuers that would meet the exemption threshold are agent banks that use the BINs of larger issuers, making it difficult for merchants to properly identify exempt transactions, she said.
Another option would be to add an "identifier" to the transaction data, preferably within an existing data field. "A new field would be very difficult for a merchant or a processor to deal with," Perry said. "It wouldn't be an ideal situation."