Contrary to the assurances of Illinois Senator Richard Durbin (D), the interchange cap which flows from the amendment that bears his name will reduce credit union income from debit card interchange.
The Federal Reserve Board took up a discussion of the debit interchange rule at its Dec. 16 meeting, which the board broadcast on the web.
Speaking in response to Federal Reserve Governor Elizabeth Duke about the impact of a debit interchange rule on small issuers, such as credit unions, the staff replied that the while the proposed rule would likely allow networks to have two debit interchange schedules, it would not require them to do so. Payment networks might decide it would be too expensive to establish two schedules or too much trouble, the staff said.
The staff also noted that that the statute also explicitly allows merchants to steer their transactions and that they could discriminate against small issuer issued cards since they would carry higher interchange under a dual schedule system.