WASHINGTON--(BUSINESS WIRE)--NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt issued the following statement refuting evidence of consumer savings from the debit card interchange fees established under the Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“After two years with the Durbin amendment, retailers are reaping $8 billion in rewards while there is still no proof of any savings being passed along to consumers. In fact, consumer prices have continued to rise despite claims to the contrary. Credit unions--not-for-profit, member-focused financial institutions--continue to struggle to serve their members.”
As a result of the Durbin amendment, credit unions have been under a lower rate regime for debit interchange fees for two years. A provision to exclude institutions under $10 billion from the rate cap was intended to insulate smaller institutions from the impact of the provision. However, based on data collected in NAFCU’s monthly Economic and CU Monitor survey, 64 percent of member credit unions under $10 billion have experienced a decline in their per-transaction interchange fees since 2011.
The Federal Reserve’s 2013 study on “2011 Interchange Fee Revenue, Covered Issuer Costs, and Covered Issuer and Merchant Fraud Losses Related to Debit Card Transactions” also reported decreases in interchange fees from exempt issuers. The study noted a 4 percent decline from the 45 cents per transaction average during the first nine months of 2011.
Credit unions also reported in many cases that the fees are not sufficient to cover the costs of processing additional transactions. Credit unions are considering a variety of measures to recover these losses, highlighting the unintended consequences of the Durbin amendment on financial service consumers. The most common measure that survey respondents have taken or are considering is eliminating or reducing debit rewards programs (27.6 percent). Other options include eliminating free checking accounts (25.8 percent), reducing staff (12.9 percent) and charging members a monthly fee for access to a debit card (9.4 percent).
“Ultimately, consumers will be hit with a double whammy if credit unions stop offering many of their low cost, low-fee services.”
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.