Fed Debit Card Interchange Rule

On December 16, 2010, the Federal Reserve issued a draft rule on debit interchange that would limit what merchants pay to accept debit cards. As a result, the nation's largest 2% of merchants will receive a $12 billion windfall, leaving consumers and small community institutions to foot the bill and disrupting the fragile balance of America's economic recovery.

On February 17, 2011 hearings of the Senate Banking Committee and House Financial Services Subcommittee on Financial Institutions and Consumer Credit emphasized the need for delay on the rule amid serious concerns about harmful consequences for consumers and small financial institutions.

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HOW THIS RULE WILL AFFECT...

Consumers

Consumers could be forced to pay higher fees, receive fewer rewards, and face new restrictions on their debit card.

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Community Financial Institutions

Small institutions could be forced to increase fees to fund their debit card programs due to the serious loss of interchange revenue that will result from this rule.

Find out why the so-called “carve-out” for small financial institutions will not work.

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Vulnerable Communities

Lower-income consumers who are not able to afford extra fees on their checking accounts could be forced out of traditional banking entirely. And, government agencies that offer benefits on prepaid debit cards could be forced to start passing those costs on to taxpayers.

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