Debit Card Interchange a Significant Source CU Non-Interest Income

ARLINGTON, Va. – NAFCU's November Flash showed that debit card interchange accounted for almost 20% of the responding credit unions' non-interest income over the first three quarters of this year, even though, on average, only 42% of a credit union's membership carried their CU's debit card. By contrast, the Flash survey found that credit card interchange income accounted for only 10% of the average CU's non-interest income over the same period. Overall, 97% of the credit unions that responded to the Flash survey said that they issued debit cards to their members. In the wake of the 2003 Wal-Mart debit settlement, 65% of the credit unions responding to the survey reported that the deal which ended Wal-Mart's litigation against Visa and MasterCard had a small or moderately negative impact on its debit interchange income. Only 3% reported the settlement had a substantially negative impact. The settlement had been widely expected to cut interchange income by 33%, but rising debit transaction volumes took some of the edge off that loss. Twenty-three percent of the credit unions surveyed reported that the settlement had no impact on their debit interchange income. Further, 7% of credit unions surveyed reported that the settlement had a small or moderately positive impact on their debit income and 2% of credit unions surveyed reported the settlement had a substantially positive impact on their debit interchange income.