Durbin Amendment Debit Change Largely Not Happening, Consultant Says
A consultant with a leading card association said that many credit unions have not opted to make a key change to their debit programs that he and other consultants are advising them to make.
Bill Lehman, portfolio consultant with Card Services for Credit Unions, reported that many of the credit unions that have contacted him about their debit program under the Durbin Amendment rules have opted not to evaluate their POS networks and reduce their number to the minimum two networks the new regulations require them to have.
Card Services for Credit Unions is the association of credit unions that process card transactions with FIS and represents the largest number of card-issuing credit unions.
Under regulations promulgated to enforce the Durbin Amendment, debit card issuing credit unions are required to have relationships with at least two unaffiliated debit POS networks.
In addition, the rule's changes to the ways merchants can route their debit transactions means that credit unions with more than two POS networks risk undermining their interchange income.
In response, Lehman and other consultants have widely suggested credit unions examine their existing POS networks and cut their numbers down to two, but he reported few with additional POS networks have started doing so.
“The feeling I am getting from a number of them is that they are saying 'OK, we're compliant so we don't have to make any more changes,'” Lehman said. “When really, they need to do that.”
Lehman acknowledged that the process of evaluating POS networks can be daunting and can require a CU to look closely at the representation a POS network has in relation to its cardholders as well as the interchange schedule that the network offers and the potential expense of having to issue new plastics.
But he stressed that the coming change in the processing industry will demand credit unions adapt and he urged credit unions to defend their interchange income as much as they can.