Visa Inc.'s decision to devise dual interchange schedules in the wake of the Durbin amendment is drawing a strongly negative reaction.
Since Visa's announcement that it would accommodate separate interchange rates for smaller and larger institutions, the American Bankers Association and the National Association of Federal Credit Unions have come out against the payment network's decision.
NAFCU President Fred Becker said that, though the San Francisco payment company is trying to comply with the legislation's intent, it is in error for choosing to separate smaller issuers from larger ones.
"NAFCU still strongly believes that the two-tier system will not work in the long run," Becker said in a press release.
"We will continue to work with the Federal Reserve and Congress to lift the burdensome fee cap for all our member credit unions," he said.
Kenneth J. Clayton, the ABA's senior vice president and chief counsel, added that two-tiered pricing does not alleviate the legislation's negative consequences.
"Despite the statutory attempt to separate out smaller banks from the price controls embodied in the Durbin amendment, the marketplace will do what it always does — drive business to the lowest-cost option," he said in a separate press release.
"Community banks will ultimately be harmed as a result, making it harder for them to meet the needs of their customers and local communities," Clayton added.
Last month, the Federal Reserve Board published a proposal to restrict interchange fees on debit cards to 12 cents per transaction for institutions with $10 billion or more of assets. Smaller companies would not be restricted.
Visa did not say when it expects to impose the dual rate schedule. The Fed's rules are expected to take effect July 21.
