Reg. II FAQ - 235.6 Prohibitions– May a payment card network offset fees for optional services provided to issuers related to electronic debit transactions or debit card-related activities with payments and incentives paid to the issuer …

Compliance > Regulation II - Debit Card Interchange
Q:  May a payment card network offset fees for optional services provided to issuers related to electronic debit transactions or debit card-related activities with payments and incentives paid to the issuer related to electronic debit transactions or debit card-related activities, so that, for example, no fee actually is charged to issuers for the services?
 
A:  A payment card network may use any method of charging its issuers for optional network services and distributing payments and incentives that is reasonable given the facts and circumstances. For example, a payment card network may charge an issuer for optional network services and subsequently provide an incentive payment to the issuer. Alternatively, a payment card network may offset the fees owed by the issuer for the optional service against any incentive payments owed to the issuer prior to charging the issuer. A payment card network's pricing of optional services should be reasonable and should not be a means to circumvent the prohibition on net compensation. (Added September 14, 2011)
 
 
ADDITIONAL INFORMATION:
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: 
 

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