WASHINGTON—In a letter to the Senate, America’s Credit Unions expressed its “strong” opposition to the Federal Reserve’s debit interchange proposal in a letter to the Senate Banking Committee.
The letter was sent in advance of Fed Chair Jerome Powell’s appearance before the banking committee this week, and follows comments America’s Credit Unions submitted in April in which it called for the proposal to be withdrawn.
As CUToday.info has reported, the Fed proposal would adjust all three components of Regulation II’s interchange fee cap and calculate it with information weighted towards the largest volume debit card issuers.
‘Seriously Flawed’
“This proposal is seriously flawed. A skewed methodology for assessing base component costs fails to give appropriate weight to the cost experience of most covered issuers, especially credit unions,” wrote ACU President/CEO Jim Nussle. “Additionally, the Notice of Proposed Rulemaking (NPRM) does not consider the market impact of recent amendments which went into effect in July 2023, requiring dual routing for card-not-present transactions. The July 2023 amendments and resulting changes in merchant routing behavior will have a direct bearing on the overall monetary impact of the revised interchange fee cap for both covered and exempt issuers.”
Nussle cited Government Accountability Office’s research showing the current cap under the Durbin Amendment is among the regulations that has most affected the cost and availability of financial services.
He called on the committee to support the Secure Payments Act, legislation introduced in June that would halt implementation of the rule until its impact can be studied.