Sept. 4, 2012 – NAFCU welcomes the Federal Reserve Board’s move to survey 1,000 depository institutions that are exempt from the debit interchange fee cap about costs associated with the cap statute, as the association has advocated for just such a review.
NAFCU has repeatedly voiced concerns that the Fed’s 21-cent debit interchange fee cap, which went into effect April 1, is too low and would have negative repercussions for credit unions and other small issuers that are exempt from the cap.
One such repercussion is that exempt institutions would see a reduction in their debit fees as a result of merchant discrimination. Data from a Fed report earlier this year showed that exempt issuers have already seen a small decline in debit fees. NAFCU is concerned the decline will continue over time, and that market forces will eventually push all institutions under the cap.
NAFCU has also expressed concerns about the network exclusivity portion of the statute, which requires all institutions, including exempt ones, to have in place at least two unaffiliated networks – one signature-based, one PIN-based – over which debit transactions can be routed. Such a requirement poses major operational and cost challenges without providing any value to consumers.
The Fed survey asks a random sampling of exempt institutions about these and other issues related to debit interchange. The Fed sent a letter to the institutions about the survey and is asking them to complete it online by Oct. 31. The survey is voluntary.
In March, NAFCU was among nine financial industry groups that filed a joint brief stating the Fed set the debit interchange fee cap too low. The association will continue to work diligently toward reducing the burden that the cap and other rules pose to credit unions.