Interchange Fees

In January 2017, language to repeal the entirety of the Durbin amendment on interchange was included in the reintroduced version of House Financial Services Chairman Jeb Hensarling's Financial CHOICE Act. However, the provision was stripped before the House voted on final passage of the underlying measure - which passed in June 2017. The bill now awaits further consideration in the Senate.

Urge your members of Congress to support the repeal of the Durbin amendment on interchange.

While disappointed that the House was unable to vote on repealing the Durbin amendment, NAFCU remains vigilant in advocating for a full repeal of the amendment and will be closely monitoring this issue on an ongoing basis. NAFCU is also working to ensure that there are no attempts to extend the Durbin amendment to credit products.

In the 114th Congress, Rep. Randy Neugebauer (R-TX) introduced legislation (H.R. 5465) to repeal the the Durbin amendment.The language was subsequently incorporated into Title III of H.R. 5984, Financial CHOICE Act of 2016, introduced by House Financial Services Committee Chairman Jeb Hensarling (R-TX). A full House vote on Chairman Hensarling's bill did not occur in the 114th Congress, though the bill was approved by the House Financial Services Committee in September 2016.

NAFCU's Position on Interchange Fees

NAFCU will continue to monitor this issue and advocate on behalf of our member credit unions to preserve a reasonable return for credit unions from interchange fee income, including advocating for the cap on debit interchange fees to be raised.

The Electronic Payments Coalition, of which NAFCU is a member, has launched a campaign to show the results of a recent study proving exactly what we predicted: retailers paid much less in interchange fees while passing no savings on to consumers. Data shows that the retail industry has already seen $825 million in savings since the government regulation on debit cards went into effect.

Issue Background Information

During the 112th Congress, Senators Jon Tester (D-MT) and Bob Corker (R-TN) introduced S. 575, The Debit Interchange Fee Study Act of 2011, a bill that would have delayed the implementation of the Durbin debit interchange price caps for two years and require the Federal Reserve, FDIC, OCC and the NCUA to jointly study the true impact of regulating debit interchange and report back to Congress.  

The bill's language was modified under an amendment that would delay the implementation of the Durbin interchange price caps for 12 months with a 6-month study of the proposed rule by the Federal Reserve and functional regulators (including the NCUA). If the Federal Reserve and one other regulator found that certain triggers were met where financial institutions or consumers may be harmed by the current proposal, the Federal Reserve would then have 6 months to rewrite and implement a new rule where all of the costs associated with debit transactions would have to be considered. Furthermore, every two years the Federal Reserve would have to report to Congress on the effectiveness of the exemption to the price caps for those financial institutions with less than $10 billion in assets.

Due to a filibuster threat from Senator Richard Durbin (D-IL), the Tester-Corker amendment required a 60 vote threshold to pass. Unfortunately, the amendment failed to clear the threshold by 54-45 votes. While the amendment vote was a significant setback, NAFCU continues to work to mitigate the impact of debit interchange rules on credit unions.

In June of 2011, the Federal Reserve released its final rule which deems the maximum interchange fee that an issuer may receive for an electronic debit transaction, the sum of 21 cents per transaction, plus 1 cent if certain fraud policies are in place and 5 additional basis points to take into account fraud costs. The rule went into effect on October 1, 2011.

After the rule was imposed, as NAFCU predicted, several big banks implemented new fees on the use of debit cards. This decision has led to an overwhelming outcry among consumers who were hit with the fees and forced some banks to roll back those fee increases as their customers took their business elsewhere. In response to this unintended, yet foreseen consequence, Representatives Jason Chaffetz (R-UT) and Bill Owens (D-NY) introduced H.R.3156, the Consumer Debit Card Protection Act, to repeal the Durbin debit card interchange price control amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

More video updates on Interchange:
August 28, 2013 following submitted briefs
August 21, 2013 following hearing
August 14, 2013 following hearing

Court Proceedings

On July 31, 2013, the Federal Judge Richard Leon of the District Court for the District of Columbia ruled to overturn the Federal Reserve's rule limiting the fees that financial institutions can charge merchants for processing debit card transactions (NACS, et al., v. Board of Governors). Essentially, the court invalidated the Federal Reserve's reasoning for including a broad range of fees in the final rule and invalidated non-exclusivity provisions. (Read the ruling.)

On August 14, 2013, Judge Leon set a tight schedule for the Federal Reserve to revise its debit interchange cap rule, asking that they reconvene in one week's time for the Federal Reserve to present a plan for issuing an interim final rule. On August 21, 2013, after informing Judge Leon of its intention, the Federal Reserve Board filed an appeal of the court's decision. In addition, the Fed Board filed an expedited appeal and requested a stay of the court's decision pending the appeal. NAFCU fully supported the Fed's decision to appeal.

The request by merchants and the Federal Reserve Board for an  expedited briefing and consideration of the Fed's appeal of the district court ruling to vacate the Fed's debit interchange rule was granted. The expedited schedule gave the Fed until Oct. 21, 2013 to submit its brief in the appeal. Amici – which include NAFCU – also had until Oct. 21, 2013 to submit their brief supporting the appeal.

On August 26, 2013, the Fed filed a consent motion for a stay of Leon's decision, pending appeal, with NACS (the merchants) agreeing that there should be a stay pending appeal. On August 28, 2013 additional briefs were filed in the case. NAFCU, with other financial industry trades, filed an amici brief to Federal Judge Richard Leon on whether or not the Federal Reserve should issue an interim or expedited final rule as requested in his debit card interchange fee ruling.

In the amici brief, NAFCU argued:

  • the court lacks the authority to require the Fed Board to issue an interim or expedited rule;
  • the court should not require an interim or expedited rule and rushing to do so will harm all parties involved, including consumers, and will threaten the current electronic debit card payments system; and
  • an order requiring the Fed to issue an interim or expedited rule will likely lead to more litigation.

NAFCU strongly supported keeping the status quo in place so as to not disrupt or confuse the financial sector with a new interchange rule. Both the merchants group and Federal Reserve also submitted briefings to Judge Leon and both agreed that a stay of the status quo is the best option in this case. On September 20, 2013 the stay requested by all parties was granted.

On October 21, 2013, the Federal Reserve submitted its brief in the appeal. That same day NAFCU and other amici also filed a brief in favor of overturning the ruling invalidating the Federal Reserve Board's debit interchange rule. NAFCU wants to see the cap on debit interchange fees raised. The Federal Reserve's final rule limits debit interchange fees to 21 cents per transaction plus 1 cent for fraud costs. This cap applies to debit card issuers having more than $10 billion in assets, but NAFCU notes that fees to smaller institutions are already on the decline and are expected to drop further due to market forces.

In addition to the points made in the brief filed on August 28, 2013, the amici brief  supporting the appeal notes that the court and the Federal Reserve have departed from congressional intent in their interpretations of interchange fees being "reasonable and proportional" to a transaction cost, and in terms of the network non-exclusivity clause. Enabling additional networks on debit cards, as interpreted by the court, would force issuers to develop currently non-existent technology and exponentially drive costs up for issuers of all size.

On November 20, 2013 the merchants filed their appeal brief supporting Judge Leon's decision in July 2013 to vacate the Federal Reserve's rule limiting the fees financial institutions can charge for processing debit card transactions.  

On March 21, 2014, the United States Court of Appeals for the District of Columbia overturned the District Court's decision that shot down the Federal Reserve's rule limiting the fees that financial institutions can charge merchants for processing debit card transactions. This marks a tremendous victory for our nation's credit unions.

The appellate court:

  • Ruled in favor of the Federal Reserve Board on almost all of the issues presented to it. They did remand the issue of transaction-monitoring costs in order for the Board to better explain themselves, noting that they "may well be able to" but that the Board "has yet to do so."
  • Rejected the district court's analysis and concluded that the Board reasonably interpreted the Durbin Amendment as allowing issuers to recover some costs in addition to incremental ACS costs.
  • Rejected the district court's analysis regarding network exclusivity, deferring "to the Board's reasonable interpretation of section 920(b) and reject[ing] the merchants' challenge to the anti-exclusivity rule."
  • The decision can be found here.

On August 18, 2014 merchants filed a petition for a writ of certiorari to the Supreme Court regarding their suit challenging the Federal Reserve Board's debit interchange fee standard. The merchant's petition was denied on January 20, 2015. With the U.S. Supreme Court's denial of certiorari, the Fed's interchange rules will stand. The justices declined to hear the appeal from retailers without comment, leaving the D.C. Circuit Court of Appeals opinion in NACS v. Board of Governors of the Federal Reserve System intact. In that decision, the court wasn't satisfied with the way the FRB explained its rationale for allowing debit card issuers to recover "transaction-monitoring" costs and bounced the whole question back to the FRB for "further explanation." NAFCU will continue to monitor the issue and report any developments.

Recent Media Outreach

NAFCU has stayed at the forefront of this issue and continued to champion credit unions in major media nationwide.

 Some Plays In CFPB's 'Payback Playbook' Will Limit CUs, Says NAFCU; Group Also Urges Repeal of Durbin (, June 12, 2016)

 Durbin Failing to Lower Merchant Costs: Study (Credit Union Times, September 3, 2015)

SCOTUS Declines Retailers' Interchange Appeals (Credit Union Journal, January 20, 2015) 

Debit Interchange Fight Appeal Declined (Credit Union Times, January 20, 2015) 

Appeals court upholds Fed's 21-cent cap on retailer 'swipe fees' (Los Angeles Times, March 21, 2014)

Banks' Victory on Swipe Fees Seems Likely to Hold Up (American Banker, March 21, 2014)

NAFCU Hails Overturning of Lower Court Ruling on Debit Interchange Case (March 21, 2014)

NAFCU Statement Regarding Oral Arguments on Debit Interchange Rule Before U.S. Court of Appeals (January 17, 2014)

Recent Policy Letters

Read recent letters from NAFCU to members of Congress on the important issue of interchange fees.

5-1-17 NAFCU Letter on Tomorrow's Mark-Up of H.R. 10, the Financial CHOICE Act

4-25-17 NAFCU Letter on Tomorrow's Hearing on the Financial CHOICE Act

1-19-17 NAFCU Letter on Reintroduction of the Financial CHOICE Act 

11-15-16 NAFCU Letter on Repealing Debit Interchange Price Controls

9-12-16 NAFCU Letter on H.R. 5983, the Financial CHOICE Act of 2016

7-14-16 NAFCU Comments on the Financial CHOICE Act Discussion Draft

6-10-16 NAFCU Letter on Repealing Debit Interchange Price-Controls

8-09-2013 NAFCU letter to Chairman Hensarling & Ranking Member Waters on Interchange

8-09-2013 NAFCU letter to Chairman Johnson & Ranking Member Crapo on Interchange

6-7-11 Reid-McConnell Tester-Corker Amendment # 392 Support Letter

5-16-11 Reid-McConnell-Debit Interchange Data Security Comment Letter  

5-2-11 Reid-McConnell Interchange Comment Letter       

3-23-11 Boehner-Pelosi H.R. 1081 Comment Letter of Support  

3-23-11 Reid-McConnell S. 575 Comment Letter of Support 

View all NAFCU Policy Letters

Updated November 2017