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On Wednesday afternoon, the Federal Reserve issued its proposed changes to the current debit card interchange cap, which would reduce the interchange fee cap and increase the fraud-prevention adjustment. News of the proposal from the Fed was not received well by the credit union industry. At the same time, merchant groups called it "a step in the right direction."
According to an analysis of the Fed's proposal by CUNA, the changes, if enacted, would result in the following:
- Reduce the base component of the interchange fee cap to 14.4 cents (down from the current 21 cents), reduce the ad valorem component to 4.0 basis points (down from the current 5.0 basis points) and increase the fraud-prevention adjustment to 1.3 cents (up from the current one cent).
- Update all three components of the interchange fee cap (base, ad valorum and fraud prevention) every other year going forward by directly linking the components to data from the Board's biennial survey of large debit card issuers starting in 2025, without public comment.
For months, officials with CUNA and NAFCU have been very vocal in their opposition to any significant changes to the current debit card interchange cap. On Wednesday, their opposition to the Fed's move only grew louder.
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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.
