Halpern: Interchange rule excessive, needs work
Merrill Halpern of United Nations FCU, a NAFCU member credit union, told news organizations Thursday that the Federal Reserve’s debit interchange proposal fails to satisfy the president’s executive order on regulatory streamlining and poses new costs that have yet to be evaluated.
“I believe that more time needs to be spent to thoroughly study the full impact of the proposed rules beyond the typical 30-second, face-to-face retail transaction,” Halpern, assistant vice president of card services for his credit union, said in a press call held by the Electronic Payments Coalition. “We need to better understand the potential for a shift of payment cost burdens to credit union members and the customers of small financial institutions.”
NAFCU is part of the EPC, which includes credit unions, banks and payment card networks. Thusday’s press call was held to underscore the impact that the Fed proposal, issued under the Dodd-Frank Act, would have on small issuers.
The Dodd-Frank Act requires the Fed to set a rule on what is a “reasonable and proportional fee” for interchange transactions. The fee, according to the proposal, could be capped somewhere from 7 cents to 12 cents per transaction, which would impose at least an 80 percent cut in interchange fee income.
“Small” issuers – those with less than $10 billion in assets – are supposed to be exempt, but NAFCU believes the market will force all issuers into the same fee structure over time.
In its own comments to the Fed, NAFCU has urged the Fed to factor in all costs of facilitating debit transactions, including the required technology, staff, insurance against fraud – a threat merchants do not face, since electronic transactions move immediately – and the costs of cleaning up from merchant data breaches.
The president has directed federal agencies to review their rules to find ways to streamline measures that stifle economic growth. NAFCU, writing the president Tuesday, pointed to the interchange rule as one of many that could be streamlined in any effort to reduce regulatory burden.
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See original story at the National Association of Federal Credit Unions.
