Analysts and payment processing executives are urging credit unions to limit their debit network participation in order to protect their debit interchange income over the medium to long term.
Under the new Federal Reserve regulations, debit card issuers will have to participate in at least two unaffiliated debit processing networks and merchants will have the ability to route their debit transactions across networks which will cost them the least amount of interchange.
This combination has sparked fears that, over time, competitive pressure on debit processors will force them to lower interchange rates and the executives say the best way credit unions can protect their debit interchange income is to limit the number of payment networks in which they participate to no more than the required two.
Participating in more than the minimum number of payment networks required merely opens a credit union up to more chances of receiving more deeply discounted interchange, the executives argued.
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