NAFCU is "deeply concerned," about the Federal Reserve's proposal to regulate interchange fees and contends that the "supposed small issuer exemption is illusory" and won't protect small issuers.
Those are among the points made by the trade association in its comment letter to the Federal Reserve that it filed today.
NAFCU President/CEO Fred Becker wrote that the caps proposed by the Fed aren't necessary in light of the fact that Congress only requires the Fed to establish standards for assessing whether the interchange fee is reasonable and proportional. He also wrote that the Fed's calculation of credit unions' costs to operate a debit card portfolio is unreasonably low.
NAFCU also contends that the cap raises Constitutional issues since there is "case law for the proposition that companies are constitutionally entitled to a return on their investment." The letter concluded that the "logical consequence," of the Fed's rulemaking is a "competitive disadvantage for small issuers, a result that Congress specifically sought to avoid."
The Fed's proposed rule would cap card interchange at no more than 12 cents per transaction. According to the proposed rule, the allowable costs for interchange would be limited to no more than the issuer's allowable costs divided by the number of electronic debit transactions on which the issuer received or charged an interchange transaction fee in the calendar year. Or the issuer could receive debit interchange capped at 12 cents per transaction.
Comments on the Fed's proposed rule are due today and the rule must be approved by April 21 and in effect by July 21.
NAFCU, CUNA and other financial services group are working hard to convince Congress to pass a law that would at least delay the implementation of the provision on interchange, which was part of the financial overhaul bill that Congress passed last year.