Interchange, the lifeblood for many credit unions’ checking account offerings, is coming under increasing pressure. In recent years, credit unions with less than $10 billion in assets have earned about half their total revenue for demand deposit accounts from debit card interchange.

However, as 2013 came to a close, the PIN debit networks such as NYCE, STAR, Pulse and Accel started promoting to merchants a “least-cost” routing option for non-petroleum transactions less than $50, without a PIN, bypassing the higher post-Durbin clearing rails of Visa and MasterCard.

Known as PINless debit, this new payment routing undermines a revenue stream that for the majority of credit unions less than $10 billion in assets was thought to be protected post-Durbin. The net result: substantial reductions in interchange revenue, since 80% or more of debit transactions for the credit unions we have worked with qualify for this lower cost routing by the merchants. Our credit union clients have already seen interchange reductions as much as 10% to 30% and are bracing for decreasing revenue twice that amount or more by the end of next year or sooner.

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