Thursday, June 30, 2011 9:00:00 AM
Yesterday, the Federal Reserve unveiled a plan to curb the debit-card "interchange" fees, proposing a base fee of 21 cents. This is less restrictive than the draft proposal.
Credit unions and banks, with this proposal, would have more flexibility in how much they can charge merchants compared to the Fed's initial plan, which called for a 12-cent cap on the fees. Currently the average fee is 44 cents.
The draft plan lays out a three-part formula for calculating the maximum fee; for a $38 debit-card transaction, which is the average, the interchange fee would come to 24 cents.
Under the proposed formula, the Fed would set a 21-cent base fee plus a 1-cent fee for fraud prevention and a 0.05 percentage-point "ad valorem" fee to account for firms' losses due to fraud.
CUNA and the NJCUL, along with other state leagues and credit unions, have been lobbying against the original plan for many months.