On May 16th, the Nebraska Credit Union League submitted its comment letter to the Board of Governors for the Federal Reserve regarding its Regulation II proposal on Debit Card Interchange Fees and Routing.
In its letter, the League outlines the negative effects that the proposal would have on Nebraska’s credit unions with no benefit to Nebraska consumers. The Fed suggests that the proposal would lower costs for merchants of accepting debit cards and therefore reduce costs for consumers. The League pointed out that the same reasoning was used by those who supported the Durbin Debit Interchange Amendment when Dodd-Frank was passed over a decade ago. “Since the Board has already collected data to show that the outcome of an interchange fee cap does not guarantee “passed on” savings to the consumer, then instituting the same proposed rule but intending for a different result seems to be a potential for the same result” says the League. The League cannot support the Board’s proposal which would be financially devastating to credit unions while achieving no benefit for consumers.
The Board suggests that debit card issuers could offset some or all lost interchange fee revenue through customer fee increases and issuer cost reductions. The League indicated that debit interchange fees cover the costs associated with offering debit cards to their members. Additionally, Nebraska credit unions seek to maintain low fees as a financial benefit to their members. The League points out that “the Board wrongfully assumes that Nebraska credit unions have some level of control over the costs incurred” and that “Nebraska credit unions do not necessarily have the leverage larger, for-profit financial institutions may have”. The letter concludes in urging the Fed to not finalize the proposed rule.
