-
The ICBA's Camden Fine says because Dodd-Frank shifts control over routing debit card transactions from issuers to merchants, allowing them to bypass small financial institutions, it negates any benefit for exempt community banks.
February 18 -
Price caps on debit card swipe fees were supposed to spell the demise of free checking accounts, but new research from the Kansas City Fed reveals otherwise.
December 11 -
Issuers exempt from the interchange fee cap should continue to promote activation and use of their debit cards by way of issuer-sponsored and merchant-funded rewards.
January 8
In
Not only is there considerable evidence
After the rules took effect, big banks saw their gargantuan profit margins decline, although their own figures show they
Those declining margins for big banks mean small banks and credit unions have been able to use their relatively higher margins to entice customers. They have used free checking, rewards, marketing and other inducements. That has driven customers into the arms of the credit unions and small banks.
Jeremy Foster of BancVue, which sells technology and marketing products to credit unions, wrote on CU Insight earlier this month that the hit to "megabank interchange revenue" is a
"Credit unions have a serious opportunity here to leverage megabank customer dissatisfaction. They're in a position to offer free checking accounts — and even reward accounts — that account holders won't be able to find at the big banks," he wrote.
Last month, the Credit Union Times similarly reported that the Dodd-Frank provision capping fees — that had been authored by Sen. Dick Durbin — was the "trigger" seen by industry experts as allowing some credit unions to
"If we can use those rewards and get more members in the door and keep our number of active debit cards going up, that's a positive for us," Jim Minge, president and CEO of Texas Trust Credit Union, was quoted as saying in the article.
It stands to reason that community banks would also be lifted by the exemption as credit unions are reported to be. That would be in sharp contrast to how banks falsely portray the impact of the Durbin amendment: that it is killing their debit card fee business.
The big banks especially like to claim Durbin harms small banks. The reason: Market research shows small financial institutions are far more popular than big ones, and so the public is more likely to care about them than the big banks.
Small banks face many problems these days, not least of which is the prospect of being gobbled up by larger banks. But reform of the outrageous fees banks charge merchants to process debit card purchases is not one of those problems.
The bottom line: Reforming debit card swipe fees has helped small banks and credit unions and will continue to help them.
Lyle Beckwith is senior vice president of government relations at the National Association of Convenience Stores.
