Background: Credit unions issue debit cards and credit cards to their members. Interchange revenue from the use of these cards is vital to credit unions to support the administrative expense of card programs. Interchange fees allow business costs, including operating expenses, fraud risk management, and the risk of consumer nonpayment, to be shared by the payments participants.
As part of the Dodd-Frank Act, Congress enacted provisions that regulate the debit interchange rates and give merchants more control over a consumer's use of debit cards and credit cards at the point of sale and the route through which the transaction is processed. Further complicating matters, the Dodd-Frank language prohibits the Federal Reserve from taking into consideration all of the costs of the payment system when regulating the debit interchange fee to establish a debit rate that is "reasonable and proportional" to the "incremental" cost of the individual transaction.
Legislation (H.R. 1081 / S. 575) has been introduced in both chambers of Congress to delay the Federal Reserve's rule and study the impact of interchange fee regulation on consumers, merchants and financial institutions. The Credit Union National Association (CUNA) supports both bills and encourages Congress to enact them as soon as possible
View more information about the impact of changes to Interchange Fees in the video and television commercial below.
You Can Help! Contact your congressperson today. Simply enter your zip code at the CUNA Grassroots Action Center and you can "compose" a printed or email letter to your representatives. You can compose the content yourself or using the arrows, populate the content with pre-written talking points. It's fast; the entire process took me less than five minutes to complete, easy, and effective.
Credit Unions on Interchange
CUNA Interchange What are the implications for Consumers?
Increased Costs, for one: Interchange enables and supports the convenience of debit cards as a valuable feature of a checking account. For credit union members, government intervention in debit interchange fees will result in cost-shifting from merchants to consumers and increased fees for consumers to obtain debit cards. This means consumers could potentially see new or higher fees on checking accounts and other financial services.
Domino Effect of the Proposed Debit Card Rule
Take a look at a new television ad warning about the consequences of the Federal Reserve's proposed debit card rule.
EPC Ad - Domino Effect
"If Congress doesn't act now, community banks and credit unions will be squeezed, and consumers may have to pay more for their debit cards," the ad's spokesperson says.
Help keep your debit card and other credit union products & services affordable. Use the link to contact your representatives today. If you have any questions about our new services, please do not hesitate to contact us by stopping in the credit union, calling (804) 281-6341, or via email. We'd love to hear from you.
