Fed Debit Survey Did Not Include Small Issuers
The Federal Reserve did not survey small debit card issuers about their costs of issuing before it issued rules that will directly impact their income from debit card interchange.
According to the Federal Reserve's proposed debit interchange rule, the agency surveyed 131 debit card issuers with assets of over $10 billion in assets about their costs of issuing debit cards and received responses from 89. It did not mention surveying any smaller issuers about what they pay to issue debit cards.
CUNA and NAFCU reported working with the Fed on the survey, but it is unclear whether they reported the debit issuing costs of any specific credit unions.
This is important because the law that mandated that the Federal Reserve base its interchange rule on the costs of debit card issuing and credit unions, generally, have significantly higher debit card costs than much larger issuers have.
"It's really the worst of both worlds," said Jeff Russell, executive vice president at The Members Group, a card processing CUSO affiliate with the Iowa Credit Union League. "The Federal Reserve didn't ask credit unions or other small issuers about their costs of debit issuing before it came up with a rule limiting debit interchange income that will end up impacting them."