FOR IMMEDIATE RELEASE
ICBA: Two-Tier Debit Card Interchange Plan Won’t Work for Community Bank Customers
Washington, D.C. (January 10, 2010)-Karen Thomas, senior executive vice president of government relations and public policy at the Independent Community Bankers of America (ICBA), today issued this statement following news that Visa will introduce a two-tier debit interchange system for large and small financial institutions.
"ICBA does not believe Visa's intent to establish a dual interchange system for large and small financial institutions will shield community banks and their customers from the negative impact of government price-fixing of debit card interchange over the long term. A two-tier system will continue to benefit big-box retailers while leading to more consumer fees, fewer product choices and greater consumer confusion regarding card acceptance as these merchants find ways of routing transactions to maximize their cost savings and profits and shift costs to consumers.
"Despite Visa's actions, the Durbin Amendment requirements will not prevent large retailers from steering customers to cheaper rate-controlled cards issued by large banks. Further, Visa's intention leaves unanswered questions about how interchange price-fixing will affect community bank customers, how other networks will respond to the Federal Reserve's proposed rule to implement the Durbin Amendment and what effect industry pressure will have on network pricing going forward.
"ICBA will continue to work with the Federal Reserve and other policymakers and the networks to address the association's significant concerns with interchange price-fixing and any adverse effects it may have on Main Street community banks and their customers."