WASHINGTON—America’s Credit Unions has joined several other financial trade organizations in issuing a “Myth vs. Fact one-pager” that is designed to educate lawmakers and consumers about what the groups say are “common misconceptions regarding debit card interchange.”
Other groups involved in publishing the paper include the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Electronic Payments Coalition, the Independent Community Bankers of America, the Mid-Size Bank Coalition of America, and the Clearinghouse.
“Merchants pay a small transaction cost to a cardholder’s bank or credit union any time a consumer makes a purchase using their debit card,” the organizations stated. “This charge, known as interchange, reimburses the costs to the financial institution for its investment in helping create the debit payment system, which includes offering debit cards, managing the technology, providing customer support and implementing fraud prevention measures.”
What’s Being Proposed
As the organizations noted, 2010’s Dodd-Frank Act requires the Federal Reserve to assess whether the amount of any interchange received by a debit card issuer is “reasonable and proportional” to the cost incurred by the debit card issuer. To implement this, the Fed established a debit interchange cap via Regulation II.
The Fed is now proposing to reopen Regulation II and lower the debit interchange cap by 30%, “without fully accounting for all costs necessary to offer this service or the consumer harm the change would cause,” the groups stated.
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