The Independent Community Bankers of America (ICBA) and the National Association of Federally-Insured Credit Unions (NAFCU) recently expressed opposition to proposed Federal Reserve interchange regulation modifications.
The ICBA maintains the Federal Reserve Board should not update debit card interchange regulations without fully analyzing the impact the proposed alterations would have on consumers and financial institutions.
“While the Durbin Amendment is poor public policy that has been empirically proven to harm consumers and the viability of local financial institutions in favor of ‘big box’ and large e-commerce retailers, community banks continue to comply with its provisions,” ICBA President and CEO Rebeca Romero Rainey said. “ICBA calls on the Fed to study the potential impact of updating its interchange regulations before proceeding with a new rule to ensure it is in the best interest of consumers.”
The ICBA also maintains that the Federal Reserve Board should not expand defined transaction types to include subcategories of card-present and card-not-present transactions. Debit card issuers should not be put at risk of non-compliance because of actions taken by third parties involved in transactions.
NAFCU Regulatory Affairs Counsel James Akin recently forwarded correspondence to the Federal Reserve regarding the matter.
“NAFCU requests that the Board immediately withdraw the proposed modification to Regulation II,” Akin wrote. “To the extent that the Board continues in this rulemaking, NAFCU requests that the Board provide further analysis on the impacts of the proposed modification on the payment routing ecosystem and that it consider the severe repercussions that the modification would have on credit unions and their members due to increased fraud risk and compliance costs.”
Per Akin, the modifications would create a technology mandate driving most transactions across rails with authentication methods credit unions may judge as inferior.