WASHINGTON—The Federal Reserve’s proposal to further lower debit interchange fees was the top priority during a meeting this week between financial services trade groups and Federal Reserve Vice Chair Michael Barr, according to America’s Credit Unions, which participated in the meeting.
During the meeting, Andrew Morris, senior counsel for research and policy, reiterated credit unions’ opposition to lowering the debit interchange cap and raised concerns related to the sustainability of free and affordable banking services, according to ACU.
What Proposal Would Do
As CUToday.info has reported, the proposed changes would adjust all three components of Regulation II’s interchange fee cap, calculated using information that is weighted towards the cost experience of the largest, highest volume debit card issuers.
Comments are due to the Fed May 12, with America’s Credit Unions encouraging leagues and credit unions to submit comments.
As CUToday.info reports separately, Apple FCU President/CEO Andrew Grimm will be part of a panel discussion at a hearing on airline and credit card rewards being hosted by the CFPB and the Department of Transportation on Thursday. Grimm will be sharing the opposition of credit unions to the Fed’s debit interchange proposal.
‘Not Required and Unnecessary’
Greg Mesack, America’s Credit Unions’ senior VP of advocacy, said the trade group has compiled an “excellent economic study” in support of the association’s comment letter. Based on a comprehensive survey of credit unions, Mesack said the research makes the case the rule is “not required, it's unnecessary and it would be damaging to credit unions.
“But more importantly, for credit union members the impact will be tremendous,” Mesack continued. “The data does not support any sort of reduction in debit interchange fees. Quite the contrary, it shows that yes, there have been rising costs and rising fraud costs…but even for credit unions below the $10 billion (exemption) threshold—and the Fed research backs this up—there will be at least 30% decrease in debit interchange.”
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