LSCU COOP / Communication & Press Room / News Feed / Top Stories / Fed Proposal Revises Debit Interchange Regulations; Comment letters requested

Fed Proposal Revises Debit Interchange Regulations; Comment letters requested

The Federal Reserve Board (Fed) has issued a proposed rule regarding the regulation of debit interchange fee income, as mandated by the Dodd-Frank Act. The new proposal raise many concerns while including an exemption for small issuers of $10 billion or less in assets from the interchange fee rate setting. The provisions; however do not enforce the exemption. As a result of the lack of exemption enforcement, small issuers may be subject to the same fees required for large issuers. The Fed is asking for comments from financial institutions by Feb. 22 and the LSCU would like the comments by Feb. 8. As written now, the LSCU and CUNA are opposed to the interchange proposals.

For background, the Fed is proposing two alternatives regarding the interchange fee rate setting. Under “Alternative 1,” an issuer could only recover the greater of 7 cents per transaction or its actual costs of the electronic authorization and settlement of the transaction up to a maximum 12 cents; or “Alternative 2,” which allows for interchange fees that vary with the value of the transaction up to 12 cents per transaction.

To read a complete summary of the proposed language and for more on how to submit a comment letter, visit the LSCU MBL and Interchange Resource area of the website.

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