Larger credit unions will bear more of the costs on limits on interchange fees than the NCUA estimates, the heads of CUNA and NAFCU said in response to a letter that NCUA Chairman Debbie Matz wrote to Federal Reserve Chairman Ben Bernanke.
CUNA President/CEO Bill Cheney said Wednesday that his group finds NCUA's "estimates of debit card transaction costs for larger issuers to be incredibly understated. First, as was the case with the Fed's previous costs study at large issuers, internal and/or indirect costs such as labor, equipment, overhead and fraud prevention are not included,'' he said in a statement.
NAFCU President/CEO Fred Becker wrote Matz that "during the survey process, one of our members informed us that they did not believe NCUA was asking the right questions to correctly determine the cost of interchange.''
He reiterated the association's opposition to separating credit unions by size and contended that the "proposed price caps are bad public policy for all credit unions.''
In a letter released by the agency Wednesday, Matz wrote Bernanke that under the proposed new rule, federally insured credit unions with assets of $100 million or less that issue debit cards will face interchange costs exceeding the maximum allowed.
She noted that because of this, the Fed should modify its proposed rule to "take into consideration the unique circumstances of smaller credit unions.''
Matz wrote Bernanke that that the median cost per transaction was 31 cents per transaction for credit unions with assets of $10 million or less and 19 cents per transaction for credit unions with assets between $50 million and $100 million.
Direct costs don't fall below the proposed cap until credit unions reach the $100 million to $500 million asset range. According to NCUA data, the median cost for those credit unions is 8 cents per transaction.
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