Q: Beginning on July 21, 2012, will a card lose its exemption if a cardholder may be charged a fee for a transaction that was declined at an ATM?
A: Yes. Section 235.5(d) provides that debit card transactions that otherwise qualify for the exemptions under § 235.5(b) and (c) from the interchange fee standards will no longer be exempt if the cardholder may be charged a fee with respect to the card for an overdraft, including a shortage of funds or a transaction processed for an amount exceeding the account balance. Accordingly, debit card transactions will lose the exemptions under § 235.5(b) and (c) if the cardholder may be charged an ATM decline fee due to a shortage of funds in the cardholder's account at the time of an ATM transaction. (Added November 2, 2016)
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: