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NAFCU to the Fed: Avoid unwarranted review of interchange cap
NAFCU Senior Vice President of Government Affairs Greg Mesack wrote Thursday to the Federal Reserve asking the Board of Governors to avoid an unwarranted review of the regulated debit interchange fee cap. He noted the fees are proven to help offset costs, but may be insufficient to manage and mitigate debit card fraud that has been on the rise in recent years.
In the letter, Mesack said for “many community-based financial institutions like credit unions, costs remain considerably high and comprehensive transaction costs remain elusive,” which impacts the ability of the Board to see the ripple effects of the interchange fee cap.
Additionally, Mesack highlighted that although the majority of credit unions are “exempt” from the interchange fee cap, they have not been spared the impacts of the Durbin Amendment, and have seen a sharp and steady decrease in interchange revenue since 2011, hampering their ability to fight fraud and provide essential financial services to local communities, especially underserved populations.
“NAFCU staunchly oppose any efforts to reduce the debit interchange rate. We urge the Federal Reserve Board to consider the disparaging effects such a move would have on credit unions and, by extension, the communities they serve. We remain open to further discussions and are willing to provide additional insights into the adverse ramifications of revisiting the debit interchange rate,” Mesack concluded.
Currently, NAFCU’s advocacy team is hard at work raising awareness of the consequences of the big box bailout bill, which would extend debit interchange caps to credit cards. Credit unions are encouraged to take action and contact lawmakers via NAFCU’s Grassroots Action Center. NAFCU is also seeking statements from credit unions to share with the media about how this bill will hurt business operations and members; submit a statement now.