Now that the Durbin Amendment is a reality, this might be a good time for a reality check. New caps on debit card interchange income won’t affect most credit unions directly: Institutions with less than $10 billion in assets are exempt. But new regulations related to payment networks apply to all debit card issuers, as will changes to the overall landscape for debit and checking. For exempt credit unions, CO-OP Financial Services has stated its belief that interchange rates are likely to show little or no decline for the remainder of 2011. For these institutions, the CUSO believes all networks will implement a two-tier system maintaining interchange at rates near the current $0.44 per transaction average. And that means an opportunity for credit unions when debit card usage is up and consumer interest in electronic forms of payment is at an all-time high. The marketplace is also telling us:
- Banks are considering debit card fees (examples: $25 annually or as much as $4 to $5 monthly) as a way to offset income reductions.
- Consumers are opposed to paying fees for using debit. In an Associated Press poll conducted by GfK Roper Public Affairs, 61 percent of consumers said they would “find another way to pay” if charged $3 monthly for debit card services.
- Debit cards – and the checking accounts they service – remain a primary means of building and maintaining primary financial service status with members. Meeting expectations is critical.
- Discouraging debit card usage is the wrong tack. Encouraging greater debit volume is one way to improve revenue. Among the findings of an excellent study by Filene and the Federal Reserve late last year: Credit unions may also accelerate interest in other, less regulated forms of payment such as credit cards, mobile payments and so on.