Q: Does a debit card comply with the provisions in § 235.7 if the card is enabled for processing transactions over two unaffiliated card networks but, once the card is swiped, the transaction is required to be authenticated using a specific authentication technology available only through one network enabled on the card?
A: No. Section 235.7(b) prohibits an issuer or a network from inhibiting the ability of any person that accepts or honors debit cards for payments to direct the routing of electronic debit transactions for processing over any payment card network that may process such transactions. If an electronic debit transaction initiated using a debit card enabled for certain authentication technology (e.g., a chip) must, once the card is swiped at the point of sale, be processed over a specific payment card network, that debit card does not comply with the prohibition on merchant routing restrictions under § 235.7(b) if the merchant is unable to direct the cardholder to authenticate the transaction so that it may be processed over at least one other unaffiliated network enabled on the card. (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: