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Federal Reserve Interchange Rule Could Result in Drastic Cuts For CU Income

The impact of the Federal Reserve's proposed rule on debit interchange could be a "drastic" cut to CU debit card income, according to CUNA CEO Bill Cheney.

By David Morrison | Updated on December 15, 2010

The impact of the Federal Reserve’s proposed rule on debit interchange could be a “drastic” cut to CU debit card income, according to CUNA CEO Bill Cheney.

Speaking on a press call sponsored by the Electronic Payment Coalition, an industry lobbying group put together to address interchange and other card payment issues, Cheney quoted industry estimates that the cut could drop debit interchange between 70% and 90%. The Federal Reserve’s proposed rule on debit interchange capped debit interchange at no more than 12 cents per transaction. This would be a flat fee whereas debit interchange is currently calculated as a percentage of a transaction, often around 1%. Hence a $50.00 debit card purchase now makes an issuer 50 cents would only make 12 cents.

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