The Federal Reserve Board building in Washington, D.C., Photographer: Joshua Roberts
NAFCU, CUNA and four banking groups wrote to the Federal Reserve Board of Governors this week to request it pull back on a recent proposal to reopen discussions involving Regulation II, which covers debit card interchange fees in the Durbin Amendment of the Dodd-Frank Act.
The letter, signed by CUNA, NAFCU, the American Bankers Association, the Consumer Bankers Association, the Independent Community Bankers of America and the National Bankers Association, stated their opposition to any further variations to interchange fees as laid out in the Durbin Amendment.
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"We urge the Board to reconsider its recent proposal to reopen Regulation II and to resist requests from retailers for further changes that would increase the regulatory burden associated with the Durbin Amendment to the Dodd-Frank Act," the letter read.
The group also restated its position in the letter that asked the board to recommend to Congress to repeal the Durbin Amendment.
The letter stated, "Bank- and credit union-issued debit cards provide convenient access to deposits and serve as an alternative to cash, checks, expensive remittance transfers and credit cards. Unfortunately, the Durbin Amendment has distorted the debit card and consumer checking markets, much to the detriment of consumers."
According to the groups, the Durbin Amendment requires the board to set an interchange cap that is reasonable and proportional to the costs incurred by issuers with respect to debit card transactions.
The organizations noted the capped interchange fee did not cover the average per-transaction ACS costs for 21% of covered issuers, according to the latest debit card cost report released in May 2019.
"This trend is moving in the wrong direction: Since 2015, the cost difference between low- and high-volume issuers has only increased. Lowering the interchange fee cap would drive small- and medium-volume card issuers out of the industry, which would have negative impacts on both competition and consumers in the long run," the letter read.
The organizations did offer their support for the board's proposal to maintain existing procedures in Regulation II.
"We urge you to recognize that demands to reopen Regulation II are premature and motivated by short-term and parochial economic interests, and to exercise appropriate restraint by declining to entertain those demands," the letter stated.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
