Many small banks have never accepted that an exemption from the Durbin amendment will protect them from the measure's roughly 50% cut in debit interchange rates.
However, earnings at banks with assets of less than $10 billion appear entirely untouched by the cap in the first quarter since its Oct. 1 start.
Interchange revenue at banks identified as exempt by the Federal Reserve ticked up a few tenths of a percentage point from the third quarter to about $507 million in the fourth quarter, according to regulatory financial reports.
Meanwhile, at banks that are not exempt–those with assets of $10 billion or more (including affiliates)–interchange revenue fell 26%, to about $6.2 billion. Excluding the 15 banks where credit card loans exceeded 5% of total assets from this group–credit cards, which were not targeted by 2010's Dodd-Frank Act, account for much of the interchange income at such banks–interchange fees plummeted by almost 40%, to $2.5 billion.
The uptick in interchange income at exempt banks, and the crash at large banks, occurred as overall debit-transaction volume grew, but at a decelerating pace.
Last week, Visa Inc. Chief Executive Joseph Saunders attributed some of the slowdown to "expected de-emphasis by issuers of debit card marketing and debit rewards programs."
He said it was difficult to quantify the impact, but, "Obviously, issuers seem to be pushing their credit businesses a little bit more strongly or a lot more strongly than they do their debit businesses."
