Interchange - the drama continues

Yesterday, the Federal Reserve cut the maximum debit interchange fee to about $0.24 for the average debit card transaction, which was recently about $38. Currently the fee for the average size debit transaction is $0.44, so the new rule represents a 45% decline. However, this new $0.24 cap is much better for financial institutions than the initial $0.07 to $0.12 cap the Fed proposed back in December-2010. As a result, free checking may continue to be offered by big banks. If you recall, back in Feb-2011, the WSJ reported that some of the largest banks were starting to remove rewards programs on debit cards while others began charging $3 monthly fees to have a debit card.

Source: Brick and Associates

New Credit Card Legislation

This is a major overhaul of Regulation Z (Truth in Lending). Yes there is new legislation, and yes it will affect us substantially, but the regulators still have to write the regs and this takes time. However, there are some time lines that come up rather quickly. For instance, by August, members must receive their statements 21 days in advance. This law is mostly in response to some of our banking brethren.

IF you keep changing due dates to trick people into paying late fees, you just might be a banker.
IF you set early deadlines for receiving payment (ie. 7:15 a.m.) you just might be a banker.
IF you increase rates because your member paid his child's lunch money late, you might be a banker.

The legislation was passed to avoid these kinds of abuses.

Anyway, be aware that you may have to change your disclosures, and it is imperative that you start working with your processor or IT people ASAP.
Apologies to my banker friends who don't abuse the rules!

Tom Dluzen