PSCU Financial Services has urged credit unions to refrain from adding fees to checking accounts or debit cards in reaction to the upcoming debit interchange cap which has grown more likely.
The Federal Reserve announced last week that the cap required by the Durbin Amendment to financial reform legislation would be higher than first proposed but observed that there will still be no guarantee small debit issuers will be exempt from the cap.
PSCU CEO Michael Kelly stressed that the cap on debit interchange for debit issuers with over $10 billion in assets has the potential to give most CUs a competitive advantage in the market for checking accounts and debit cards.
“The Federal Reserve Board acknowledged what we have been saying all along—that merchants are not required to pass along the effect of lower interchange fees in the form of lower prices to consumers,” Kelly remarked in a statement about the cap regulation. “The prospect of reduced interchange rates for large banks has already prompted them to increase fees. While this can negatively impact consumers, it is a bonus for credit unions because it makes their debit cards even more attractive. Now is definitely not the time for credit unions to raise fees on checking or debit offerings. Credit unions need to seize this opportunity to win market share from banks by attracting members with these loyalty-driven products,” he added. —firstname.lastname@example.org