Even though data collected from credit unions indicates that an exemption meant to protect most credit unions from the impact of the Durbin Amendment might not be working when it comes to one kind of debit interchange, an association of retailers is claiming the amendment's small-asset exemption is shielding credit unions from any impact on another kind of debit interchange.
The Merchant Payments Coalition, an association of retail groups and individual retailers that is organized to lobby for lower debit and credit card interchange rates, argued in an announcement Monday that a recent CUNA survey of some of its members indicates that credit unions are being protected from seeing significantly lower interchange rates on debit transactions which are validated with a member's signature.
The MPC did acknowledge that the survey showed a 6% drop in interchange revenue on debit transactions which are validated by a personal identification number, but argued that the drop still left “banks” with higher overall interchange income.
“Even with the drop, the revenue is far more than what banks collected only a decade ago when the fee ranged between about 5 and 10 cents per transaction,” the MPC said.
Passed as part of the Dodd-Frank financial reform act, the so-called Durbin Amendment, named for chief sponsor Sen. Richard Durbin (D-Ill.), capped interchange for debit card issuers with more than $10 billion in assets, but was supposed to exempt debit card issuers of fewer than $10 billion. Only four credit unions have assets of more than $10 billion and thus have their debit interchange capped by the rule, though several others seem likely to pass that threshold this year.
To help facilitate the exemption, the large card brands and card processors widely implemented a two-tier interchange schedule which set one payment rate for institutions which are covered by the cap and another for institutions, largely community banks and most credit unions, which are not. “Credit unions have confirmed what the FTC, GAO and Federal Reserve have found: the small bank exemption from debit reform has worked. This news demonstrates that debit reform has been good for consumers, Main Street businesses and smaller banks as well,” said Scott DeFife, executive vice president of policy and government affairs for the National Restaurant Association and a member of the MPC.
The MPC alleged institutions which are under the Durbin cap have promulgated a myth that the cap damages credit unions and community banks.