The Federal Reserve’s rule regulating debit interchange fees could be delayed by at least six months if lawmakers approve a compromise proposal being discussed by several key senators.
During those six months, financial regulators including the NCUA would study the issue and if the study determines that the proposed rule would hurt consumers, the Fed would have six months to write a new rule.
The newest discussions come as Sen. Jon Tester (D-Mont.) is scheduled to offer his amendment on the issue as early as tomorrow. Initially Tester called for a two-year delay and then scaled it back to 15 months.
The Durbin amendment in last year’s financial overhaul bill mandated that the Fed issue a rule to regulate debit interchange fees. The Fed issued a draft rule in December and is supposed to issue a final rule next month but has been delayed in doing so because it is still going through the large number of comments it received on the proposal. The final rule is supposed to take effect on July 21.
The proposal would cap interchange at 12 cents a transaction for issuers over $10 billion in assets. Although the Durbin Amendment called for a carve out for smaller card issuers, Federal Reserve Chairman Ben Bernanke and others have expressed concern about enforcing it. Credit unions and community banks contend that because there would be higher interchange fees for debit cards from small issuers, their cards would be at a disadvantage and might not be as widely accepted.
Two conservative groups that support the Tester amendment, Americans for Tax Reform and 60 Plus, have said they will use votes on the Tester amendment as ones on which they will score lawmakers.