Trades Ask Federal Reserve to 'Resist Requests' for Durbin Amendment Changes
CU and banking groups want to stop a proposal to reopen Regulation II, which covers interchange fees.
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.
“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.