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Fed’s Debit Card Interchange Changes: Significant Revisions

On October 25, the Federal Reserve Board (FRB) released a public proposal to drastically change the debit interchange cap.

The California and Nevada Credit Union Leagues oppose legislative and regulatory changes to the existing interchange system.

The comment period for this proposal ends on February 12, 2024.

The Leagues’ Call to Action
The Leagues will implement a Connect for the Cause campaign very soon. The Leagues urge credit union leaders to amplify the Leagues’ message by submitting comments via the Connect for the Cause platform.

In summary, the proposal would adjust debit fee caps as follows:

Type of Rate Component Current Rate Proposed Rate Difference
Base Component/Fee Cap 21 cents 14.4 cents -6.6 cents
Ad Valorem Component 5.0 basis points 4.0 basis points -1.0 basis points
Fraud-Prevention Adjustment 1 cent 1.3 cents +0.3 cents


The FRB also included a proposal to revisit the interchange fee cap every other year starting in 2025. The revised limits would not be open to public comment, and the issued fee caps would be based on the FRB’s biennial survey of large debit card issuers.

Fed Board Governor Michelle Bowman shared some concerns about the proposal stating, “While the proposal suggests that it could result in benefits to consumers, I am concerned that the costs for consumers — through the form of increased costs for banking products and services — will be real, while the benefits to consumers, such as lower prices at merchants, may not be realized.”

The FRB also released its 2021 Interchange Fee Revenue Report on which it based the recent proposed rulemaking.

While the proposal exempts financial institutions with less than $10 billion in assets, the Credit Union Nation Association (CUNA) and American Association of Credit Union Leagues (AACUL) released a study that shows mandated interchange caps negatively impact local and community financial institutions like credit unions.

The Leagues will continue to closely monitor developments related to interchange, as well as providing a detailed executive summary and sending out a comment letter.

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