ICBA - Publications - CEO Alerts - Speak Up on 80 Percent Reduction in Debit Interchange

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ICBA needs your help to combat the dangerous interchange fee rule now out for comment from the Federal Reserve. We need data from community banks to help make our case and are asking community banks to complete surveys on how the new interchange mandate would affect your community bank.

The Federal Reserve rule would implement the Durbin Amendment to the Wall Street Reform Act, which will drastically reduce debit card interchange fees card issuers receive from merchants. This misguided plan would slash community bank debit card interchange revenue by an estimated 70-80 percent, leading to fewer options and higher fees for community bank customers.

If adopted, this proposal will have negative consequences for Main Street communities and your bank’s bottom line. For some community banks, debit card interchange revenue accounts for almost 25 percent of their DDA revenue and close to 15 percent of their net income after taxes.

An exemption in the law for institutions with less than $10 billion in assets and Visa’s planned two-tier system for large and small institutions will not protect the nation’s community banks or their customers. Under the law, retailers will gain control over routing debit card transactions and will use this new control to route transactions over the least costly networks and bypass the two-tier system. Further, large retailers will be able to steer customers to use the rate-controlled cards issued by the largest financial institutions, discriminating against community banks and their customers.

Rather than helping consumers, the new interchange pricing system will instead benefit those who lobbied intensely for the price-fixing provision—big-box retailers. Large merchants will use the new restrictions to minimize their costs, maximize their profits and shift transaction costs to consumers.

ICBA is working to get changes made to the proposed rules. We need to know how these proposals will impact your community bank and your customers to help us make the strongest case for change. Make your voice heard on this pressing issue by completing ICBA’s three surveys below. Learn the importance of interchange revenue for your bank and help ICBA help you.

Take Survey 1.

Take Survey 2.

Take Survey 3.

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