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CUNA files amicus brief in debit interchange case

March 19, 2012

CUNA, the Credit Union National Association, has filed an amicus brief in a lawsuit brought by merchants against Federal Reserve rules that set a debit interchange fee cap. CUNA is arguing against the merchants' case and said it is joining a broad coalition of trade associations that represent thousands of small and large financial institutions.

According to CUNA, the joint brief describes how small and large financial institutions are harmed by the Fed's tight fee ceiling and that consumers have not seen any pricing benefits passed along by merchants who lobbied for the government-set cap last year.

CUNA argues that fees, currently set under provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act are too low and do not allow debit card issuers to cover costs and receive a reasonable rate of return on investments.

Dodd-Frank, signed into law last year, included a cap on interchange rates for debit card transactions. The final ruling on the legislation set the maximum charge at 21 cents, a significant decrease from previous rates, but still well above where merchants would like to see the rate set. The rule came into effect in October.

CUNA filed the amicus brief even though most credit unions are exempt from the ruling. The Fed rules do not apply to issuers with less than $10 billion in assets. However, CUNA said the exemption may not be such a benefit as merchants can simply steer transactions towards non-exempt debit cards from bigger issuers where the costs are lower.

CUNA said other organizations joining the filing of the amicus brief include the Independent Community Bankers of America,  National Association of Federal Credit Unions,  Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, The Clearing House Association, American Bankers Association, The Clearing House Payments Company,  and The Financial Services Roundtable.

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