Interchange issues Impacting Small Issuers, Wash. Post Reports
The Federal Reserve Board's final rule implementing interchange changes caps debit interchange fees for issuers with more than $10 billion in assets at 21 cents. An additional five basis points per transaction may be charged to cover fraud losses, and an extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap, but CUNA has repeatedly warned that the exemption will not insulate credit unions and other small issues and they will be adversely impacted by the big-issuers' interchange cap.
The Washington Post item directly questions the recent claims of a December Federal Trade Commission (FTC) report (News Now, Dec. 31) that small issuers have been unharmed by the interchange regulations. The Post story noted that credit unions and community banks have called the FTC report premature, and have said the results of the FTC survey do not reflect the true impact that interchange regulations have had on smaller institutions. The story also noted that small financial institutions have had to consider, in some cases, charging new fees to cardholders to offset revenue losses created by the interchange changes.
CUNA's Hampel in the Post story pointed out that the interchange provision "that could really start to lower interchange revenues for smaller institutions took effect in April, and in the only full quarter since then, the third quarter of 2012, we saw the first-ever decline in interchange revenue for credit unions.
"We are concerned about whether that was a one-time downward shift or the first of several quarters of decline," he added.
CUNA Deputy General Counsel Mary Dunn last week took issue with the FTC's interchange claims, and CUNA is planning to outline concerns regarding the FTC's report in an upcoming letter to the agency.
Dunn said all aspects of the interchange cap law must continue to be monitored and assured credit unions that CUNA's work on these issues will continue.