Since the Durbin Amendment took effect in October 2011, the provision has led to mixed results for credit unions across the country, with some warning that the exemption provided to community financial institutions may not be effective.
While all but four credit unions across the country were exempt from the rule, executives said that, on a per transaction basis, credit union interchange revenue has fallen.
Data from the Credit Union National Association showed that signature-validated transactions generated less revenue compared to the period before the regulation took effect, and PIN transaction interchange revenue fell from $27.21 million in September 2011 to $26.26 million this past September, Credit Union Times reports.
“What we don’t know is whether this represents a one-time shift as the regulation is put into effect or whether it’s an ongoing trend,” CUNA Chief Economist Bill Hampel said, according to Credit Union Times. “If it’s a one-time effect, it still hurts credit unions but if the interchange level stabilized credit unions can probably manage it to pay for their debit programs. If it’s an ongoing trend, they may need to make changes.”
Overall debit interchange revenue, however, has not fallen as much or has risen as some credit unions increase their market saturation and develop programs aimed at boosting debit card use. Executives expressed concern that credit unions would eventually hit the maximum threshold for the number of cards they can issue, while the provisions that are harmful to credit unions will remain in place.
“I think it’s clear that increased numbers of cards and increased debit transaction volume are effectively masking the impact of an interchange drop,” Stan Hollen, the CEO of CO-OP Financial Services, said, Credit Union Times reports. “The only question is how long they can do that.”