Good Faith + Care = 21 Cents
Credit unions got a bit of good news when the Federal Reserve reversed itself and announced that debit interchange fees will be capped at 21 cents a transaction, up from the original proposal of 12 cents, with a 1 cent fee for fraud prevention and a five basis point allowance for fraud costs.
The rule, which the Fed approved 4-1 on June 29, takes effect on Oct. 1. It is the culmination of extensive debate on Capitol Hill and at the Fed, which was triggered by the Durbin amendment to last year’s financial overhaul bill that required the Fed to issue a rule that capped interchange fees.
Nevada Federal Credit Union President/CEO Brad Beal said his Las Vegas-based $685 million institution could see its interchange revenue decline from $5.8 million to $2.5 million if the two-tiered system isn’t implemented properly.
NCUA Chairman Debbie Matz praised the Federal Reserve’s rule on debit interchange fees and said it took into account the agency’s concerns about the impact on the safety and soundness of small credit unions.