WASHINGTON (4/26/11)--The Credit Union National Association (CUNA) in a comment letter has urged the U.S. Treasurys Financial Management Service to delay mandatory compliance of pending prepaid debit card rules by at least six months. The proposed delay would give credit unions the time needed to deal with the prepaid debit card rules and what CUNA termed the "tremendous uncertainty" regarding the regulation of debit card interchange.
The Federal Reserves final rule, which is expected to impose a debit fee interchange charge cap of a maximum of 12 cents per card swipe, is set to be released before July 21. However, legislators are promoting bills that would delay the implementation of the rule for as long as two years.
CUNA in the letter said that credit unions and other financial institutions will need time to deal with this rule while they are adopting new ACH codes, providing appropriate staff training, and implementing the processing changes. The interim final rule would permit credit unions to offer prepaid debit cards to receive Federal benefit payments if those cards are:
Offered by a federally-insured credit union;
Set up to meet the requirements for pass-through share insurance by the National Credit Union Share Insurance Fund;
Not attached to a line of credit or loan agreement where the delivery of Federal payments would trigger repayment; and
In compliance with all requirements that currently apply to payroll cards under Regulation E.
CUNA does not support provisions that would make financial institutions liable if they receive Federal payments on prepaid cards not intended for Federal benefit payments, as long as they take reasonable measures to identify Federal benefit payments, such as with the new ACH codes.
CUNA also urged the Treasury to minimize potential compliance costs for credit unions and said that the regulator could work with credit unions and other financial institutions to obtain operational and compliance guidance. CUNA suggested that this guidance could address prepaid cards and loan agreements and related disclosures.
For the full comment letter, use the resource link.