NEWS: The League filed a comment letter on May 9 with the Federal Reserve Board, voicing our opposition to a plan that would significantly lower the cap on debit card interchange fees. Those fees are paid by merchants to debit card issuers each time a customer uses a debit card to make a purchase.
Specifically, the proposal:
- Includes a reduction in base fees from 21 cents to 14.4 cents, a decrease in the ad valorem component from 5 basis points to 4 basis points, and a fraud adjustment increase from 1 cent to 1.3 cents; and
- Would automatically, without notice and comment, update each component of the cap every two years, based on reported issuer costs.
We told the Fed that “Wisconsin’s credit unions strongly oppose this amendment” to the Fed’s Regulation II. We characterized the proposal as “misguided,” and we asked them to withdraw it, for several reasons:
- The changes would only serve to line the pockets of large retailers;
- The changes would disproportionately harm credit unions, which, as not-for-profit institutions, are less able to absorb reductions in interchange fees than for-profit banks;
- The changes would impact all credit unions that issue debit cards, regardless of size (even though issuers with less than $10 billion in total assets are technically exempt); and
- The changes would lead to fewer financial services options for credit union members, especially in low-income areas.
The League will alert you when the Federal Reserve Board takes final action on its proposal.