Sept. 20, 2012 – Data from NAFCU’s latest Economic & CU Monitor indicate credit unions are already feeling the pinch of the Durbin amendment’s rate cap, despite the exemption for institutions with less than $10 billion in assets.
Not only did the September Monitor find that three times as many survey respondents saw a drop in per-transaction interchange fees this year (20.7 percent) as those who reported an increase (6.9 percent), but respondents in the former category were all from credit unions below the $10 billion threshold.
NAFCU President and CEO Fred Becker said that the survey results “support what the entire financial services industry already knows: The government cannot implement price controls in a vacuum.” In this particular case, Becker said, “the available evidence indicates the Durbin amendment is impacting credit unions with less than $10 billion in assets.”
The Monitor also found that NAFCU-member credit unions are considering a variety of ways to recover from lost interchange income. The most common step survey respondents have taken or are considering is eliminating or reducing debit rewards programs (27.6 percent). Other options include eliminating free checking accounts (25.8 percent), reducing staff (12.9 percent) and charging members a monthly fee for access to a debit card (9.4 percent).
In other key findings, the Monitor survey showed:
- a majority of survey participants (53.1 percent) reported that monthly gross income from debit interchange fees has increased this year, but that was due to respondents’ issuing more debit cards to members and higher use;
- the average cost of reissuing a credit or debit card as a result of a security breach was $5.20 per credit union;
- in total, survey participants spent an average of $108,495 on data security measures in 2011, with 60.6 percent expecting to spend about the same as this in 2012, while 39.4 said they expect to spend more (no respondent said they expect to spend less); and
- all survey participants said they support having retailers pay for the clean-up of local data breaches.
For more, view NAFCU’s Economic & CU Monitor.