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Fed Interchange proposal on its way
WASHINGTON (12/6/10)—Federal Reserve Governor Elizabeth Duke last week hinted that a comprehensive proposal aimed at addressing interchange fees and debit card transaction routing would be released for comment “soon.” Duke, who made the remarks during a Federal Reserve Bank of Philadelphia Payment Cards Center Conference last week, did not give any further information on the date. However, Duke said that she is “aware of the high level of interest” in interchange fees and transaction routing, and recognizes the importance of the statute and its implementation for the future development of the payment card industry. Under the terms of the Dodd-Frank Act, the Fed is required to set the interchange fees paid to financial institutions by merchants. The Credit Union National Association (CUNA) has estimated that up to 67% of credit unions would lose money on their debit card programs if the interchange regulations reduced interchange-related revenues by 40%. CUNA is discussing the interchange issue with the Fed and has also reached out to Treasury officials to discuss how various debit card-based government benefit programs could be affected by the pending interchange regulations. Democratic Maine Reps. Mike Michaud and Chellie Pingree last month urged the Fed to recognize the pro-credit union protections that were built into the Dodd-Frank Act. "While the law is clear that small issuers with $10 billion in assets or below are exempt from the debit interchange transaction regulations, they are not exempt from the impact that regulations on institutions above $10 billion in assets will have on small issuers," the representatives said in a joint letter. For Duke’s full statement, use the resource link.
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