One-pager educates lawmakers, consumers on interchange facts

America’s Credit Unions joined several other financial trade organizations in issuing a Myth vs. Fact one-pager to educate lawmakers and consumers about common misconceptions regarding debit card interchange. 

“Merchants pay a small transaction cost to a cardholder’s bank or credit union any time a consumer makes a purchase using their debit card. This charge, known as interchange, reimburses the costs to the financial institution for its investment in helping create the debit payment system, which includes offering debit cards, managing the technology, providing customer support and implementing fraud prevention measures,” wrote the organizations.  

The Dodd-Frank Act, enacted in 2010, requires the Federal Reserve to assess whether the amount of any interchange received by a debit card issuer is “reasonable and proportional” to the cost incurred by the debit card issuer. To implement this, the Fed established a debit interchange cap via Regulation II. 

The Fed is now proposing to reopen Regulation II and lower the debit interchange cap by 30%, “without fully accounting for all costs necessary to offer this service or the consumer harm the change would cause,” added the group. America’s Credit Unions strongly opposes the proposal, and successfully advocated for a 90-day extension to the comment deadline earlier this year. Comments are now due May 12. 

In February, members of the America’s Credit Unions Advocacy Team, Leagues, and several member credit unions discussed the proposal with Federal Reserve Vice Chair Philip Jefferson. The organization will continue to engage the Fed and lawmakers on this issue to advocate on behalf of the industry.   

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