Revenue from debit card interchange and overdraft fees generally accounts for more than 50% of a credit union's total noninterest income. Debit interchange rates have been on a general downward trajectory for the industry following the passage of the Durbin Amendment in 2010 and implementation of Regulation II in 2011. According to a February 2016 report from CUNA, credit unions had lost $1.1 billion as a result of the Durbin Amendment.
Simultaneously, the CFPB continues to pursue further regulation of overdraft practices beyond the changes to Courtesy Pay practices that were implemented in 2010. Proposed changes to Overdraft Prerule 3170-AA42 take a "one-size-fits-all" approach by including credit unions in the mix of banks.
As regulatory risk continues to threaten both of these important income streams, here is a look at how we got to where we are today, and what credit unions can do now and in the future to protect their noninterest income.
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