League Concerned, Engaged as Federal Reserve Considers Lowering Decade-Old Debit Interchange Fee Cap

Your League is prepared to engage with policymakers following news yesterday that the Federal Reserve is preparing a proposal that would lower interchange fees merchants pay when consumers pay with debit cards.

Merchants pay large debit card issuers – financial institutions with $10 billion and more in assets -- 21 cents plus 0.05% of the transaction amount. That level was set by the Fed in 2011. The Fed can lower the cap if it determines the costs associated with processing debit card payments have declined.

The Wall Street Journal reported that previous Fed research has shown costs for operating debit cards are going down, and the central bank has previously said it would review the cap.

“Technically only the largest financial institutions were subjected to this cap on debit card fees, but we know the cap has had a negative impact industrywide,” said League President/CEO Carrie Hunt. “If the Fed pursues lowering the fee cap, your League stands ready to engage with policymakers and lawmakers during the comment period and during any discussions in Congress. With fraud both a constant and critical concern for credit unions, the interchange battle is vitally important, requiring our vigilance and our engagement.”

Credit unions are currently fighting a credit card interchange measure in Congress. The Credit Card Competition Act (S.1838 | H.R. 3881) poses a real and significant risk to consumers, especially as it relates to fraud, privacy, and the ability of community financial institutions to provide access to credit. You can aid our advocacy efforts by emailing lawmakers today via our Advocacy Action Center.