Q: Is a card provided by a university in order to distribute Federal or state financial aid funds to a student considered to be issued "pursuant to a government-administered payment program"?
A: Not necessarily. A payment program is not a "government-administered payment program" merely because the entity distributing the card receives funding from a government agency. A Federal or state financial aid program, however, would be considered "government-administered" for purposes of § 235.5(b)'s exemption from the interchange fee standards if the Federal or state agency making payments to beneficiaries has agreed to permit another entity (e.g., a college or university) to distribute payments to beneficiaries on behalf of the government or government agency. (Added October 24, 2011)
This Q&A was obtained from FRB’s website, in a section for Regulation II (Debit Card Interchange Fees and Routing) Frequently Asked Questions, which may be found here: