Q: Section 235.6(b) prohibits an issuer from receiving net compensation from a payment card network with respect to electronic debit transactions or debit card-related activities within a calendar year. To determine whether an issuer has received net compensation, must an issuer count the entire amount of a payment or incentive received from a network or made to a network at the time that the payment is received or made? Or, may an issuer count payments as they are earned by the network or issuer?
A: An issuer may use any reasonable consistently-applied method of allocating and accounting for payments and incentives received from a payment card network and fees paid by the issuer to the network. For example, an issuer may account for compensation when the compensation is earned (i.e., on an accrual basis) rather than when the compensation is paid (i.e., on a cash basis). (Added September 14, 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: