Newsroom

NAFCU and several other financial services industry groups wrote Federal Reserve Chair Jerome Powell ahead of Wednesday’s Federal Reserve Board meeting on debit card interchange fees and routing under Regulation II. The groups urged the Fed to reject merchant requests to make changes to the regulation and to consider the costs of the regulation on regulated entities and their customers.

“The merchant petitions and presentations to the Board demanding action on Regulation II are riddled with errors, misleading statements, and false comparisons that appear designed to deceive,” the trades wrote. “As in the merchant groups’ litigation against the Federal Reserve on Regulation II, there is consistent cherry-picking of facts and omission of ‘inconvenient evidence’ that contradicts their advocacy efforts.”

In addition, the groups highlighted concerns related to further reducing the current interchange cap, the trend of merchants and processors manipulating routing rights for card-not-present transactions, using outdated data and factors to inform rulemaking efforts, and the impact on consumers.

The trades also flagged concerns with the Fed’s modifications to Regulation II that went into effect earlier this year and the lack of data to quantify how the routing rule has affected the market. They called on the Fed to refrain from any further Regulation II changes until it can analyze the impacts of the rule.

A 2022 report from the Government Accountability Office (GAO) called the original Durbin Amendment, which imposed a cap on debit interchange fees for covered banks and credit unions, one of the top five laws to have the greatest negative impact on the cost of banking.

NAFCU will continue to fight to protect interchange fees and other noninterest income to ensure credit unions can keep providing their members with safe, reliable, and affordable financial services.