When regulating interchange fees, the Federal Reserve should exercise flexibility, not make decisions in isolation and consider the costs that credit union incur when running card programs.
Those are among the requests made by NAFCU President/CEO Fred Becker in a letter sent today to Federal Reserve Chairman Ben Bernanke.
Becker, who also requested a meeting with Bernanke, urged the Fed to examine the authorization, clearance or settlement costs of particular types of transactions. This will enable the Fed to "to accurately determine the full cost of processing different debit transactions."
He urged the Fed to take these factors into consideration because "any interchange fee cap will cause operational concerns for NAFCU membership."
Becker also invoked a principle of Newtonian physics to buttress his argument.
"In business, each action creates an equal and opposite reaction. The interchange fee provisions do include an exemption for institutions with less than $10 billion in assets. However, the legislation also affects a massive, interconnected network of card companies, issuers, merchants and consumers. Simply put, the changes necessary to allow the system to continue to function cannot be made in isolation," Becker wrote.
The regulatory overhaul bill passed 60 to 39 by the Senate today-following House passage last month-allows the Fed to set debit interchange fees at a level that is "reasonable and proportional to the cost incurred by the issuer with respect to the transaction."