WASHINGTON — The National Credit Union Administration reiterated concerns about how a debit interchange proposal by the Federal Reserve Board could hurt small credit unions.
The April 29 letter to Fed Chairman Ben Bernanke, which followed earlier comments the NCUA had made objecting to the proposal, called for more "meaningful exemptions for smaller card issuers" than those offered by the central bank.
The proposal, authorized by an amendment to the Dodd-Frank Act from Sen. Dick Durbin, D-Ill., would essentially cap debit-card interchange costs at 12 cents per transaction. While Durbin's amendment exempts institutions with under $10 billion in assets from the cap, it also imposes a ban for institutions all sizes on network exclusivity and merchant routing restrictions.
Small banks and credit unions say in a competitive market the cap would effectively be for everyone. The letter, written by NCUA Chairman Debbit Matz, argued the Fed should at least apply an exemption for small institutions from network-exclusivity and merchant-routing provisions. The credit-union regulator cited data showing that credit unions with under $100 million in assets face per-transaction costs that exceed the 12-cent cap.
"Without exemptions for network exclusivity and merchant routing, credit unions belonging to a gateway with multiple networks may find themselves subject to the large institution cap," Matz wrote.
