Financial institutions issuing prepaid cards would have to disclose fees up front and give consumers wallet-sized summaries of fees, if a bill introduced by three senators is passed.
David Morrison is a senior staff reporter with Credit Union Times specializing in debit cards, among other topics.
The year 2010 will be remembered as when the federal government got involved in how much interchange banks and credit unions earn on their debit card transactions.
Credit unions and other financial institutions are likely to face an added regulatory burden as a result of the regulatory overhaul bill passed by Congress this year.
Contrary to the assurances of Illinois Senator Richard Durbin (D), the interchange cap which flows from the amendment that bears his name will reduce credit union income from debit card interchange.
The Durbin Amendment to the Dodd-Frank financial reform act will likely cut credit union debit card income in the short term but may also spur further innovations in the payments industry.
A bipartisan group of 13 senators urged Federal Reserve Chairman Ben Bernanke in a letter sent yesterday to ensure that when the Fed issues regulations on debit interchange fees they don't hurt small financial institutions and consumers.
A Minnesota based national bank has challenged the constitutionality of the law that would, for the first time, regulate debit card interchange.
Illinois senator Richard Durbin, a Democrat, has defended the debit card interchange amendment that bears his name, suggesting that the bank that has brought suit against it in federal court does not really understand it.
The Federal Reserve Board has reached out to credit union trade associations as part of its first steps toward crafting a cap on debit card interchange.