The country’s largest credit union service organization has urged credit unions to refrain from adding fees to checking accounts or debit cards in order to adapt to the upcoming debit interchange cap for larger institutions.
PSCU Financial Services CEO Michael Kelly said the cap has the potential to give most credit unions a competitive advantage in the market for checking accounts and debit cards, according to Review.net.
Last month, the Federal Reserve capped interchange fees for financial institutions worth more than $10 billion in assets. The rule set the cap at a higher rate than first proposed but did not include a guarantee that small debit issuers will be exempt from the cap.
“The Federal Reserve Board acknowledged what we have been saying all along—that merchants are not required to pass along the effect of lower interchange fees in the form of lower prices to consumers,” Kelly said, according to Review.net. “The prospect of reduced interchange rates for large banks has already prompted them to increase fees. While this can negatively impact consumers, it is a bonus for credit unions because it makes their debit cards even more attractive. Now is definitely not the time for credit unions to raise fees on checking or debit offerings. Credit unions need to seize this opportunity to win market share from banks by attracting members with these loyalty-driven products, “ Kelly said, according to Review.net.