Time for CUNA to come clean on debit reform.
Earlier this year, the Credit Union National Association tried to
tout a survey of its members to support the claim that credit unions
have been hurt by debit swipe fee reform.
There is just one problem. It’s not true.
Since the Durbin Amendment was implemented on Oct. 1, 2011, three
independent federal agencies–the
Government Accountability Office
two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850).
Federal Reserve, and the Federal Trade Commission–have
found that banks exempt from new debit swipe fee rules, including all
but three credit unions, have not been negatively affected.
This is fact, not spin. All you have to do is read the reports.
1. As stated or indicated by; on the authority of:
2. In keeping with:
the Kansas City Federal Reserve, debit reform has had
little, if any, impact on small bank revenues: “Regulated banks
have seen their interchange fee revenues fall, while exempt banks’
revenues have remained roughly the same, on average.” (p. 108).
And, the report definitively counters predictions about what would
happen under debit reform, noting “… nearly all
card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser’s checking account. They can also be used at automated teller machines for withdrawing cash from the user’s checking account.
networks have set separate interchange fees for regulated banks and
exempt banks, creating a two-tier fee structure after the regulations
took effect. The regulations forced the fees down for regulated banks,
but the average fees for exempt banks changed little after the
regulations took effect in the fourth quarter of 2011.” (p. 90).
Not enough evidence? How about the GAO:
“Unlike the large banks, community banks and credit unions
generally have not, on average, experienced a significant decline in
their debit interchange fees as a result of the Federal Reserve’s
implementation of [debit swipe fee reform].” That’s on page 27
of the report which also points out that the post-Durbin fee structure
works “to the benefit of exempt issuers.” In fact, aggregate
swipe fee income reported by exempt banks increased consistently each
quarter from the second quarter of 2011 through the first quarter of
2012. That’s on page 29 for everyone keeping score at home.
Still not convinced? Here’s what the
See Federal Trade Commission (FTC).
has to say:
“interchange fees paid to exempt issuers are higher than those paid
to non-exempt issuers.”
The FTC study includes the same
survey data that the
association says shows the exact opposite. That’s just not
plausible, given the weight of evidence provided by GAO, FTC and the KC
Federal Reserve. Scratch the surface of the CUNA data and there simply
isn’t anything there. There isn’t even a full published
report–only quotes and snippets in a handful of news stories.
The CUNA survey is not comprehensive and its analysis is
questionable. In January, CUNA stated that between 120 and 130 credit
unions participated in its survey. The association’s
later admitted that 230 credit unions took part but data from
only 155 was used. Why was nearly a third of the sample excluded from
The CUNA survey doesn’t really look at the impact of debit
reform on revenues. Such an assessment would require looking at
quarterly revenues before and after debit reform. But the survey
apparently only looked at two post-reform quarters, which showed revenue
up in one and down in the other.
The only drop in debit swipe fee revenue reported by CUNA was about
$1.38 million for all credit unions combined in the third quarter of
2012. That’s a total of about $8,900 per credit union. And, this
was only a drop when compared to the second quarter of 2012–a quarter
in which CUNA admits that swipe fee revenue increased for credit unions.
CUNA didn’t even say whether that increase was more than the
decrease in the next quarter. Regardless, it is far more likely that
this drop is simply a normal quarter-to-quarter change in the business
cycle that has nothing to do with swipe fee reform.
It’s time for CUNA to admit it was wrong. Debit reform has not
brought gloom and doom to its members. In fact, credit unions are
probably better off now than they were before because the playing field
used to be
Epidemiology adjective Referring to an asymmetrical distribution of a population or of data
dramatically in favor of the big banks. The
credibility and long-term interests of the industry would be better
served by coming clean instead twisting data to deny the truth.
Next ste Ps
Read more on CUNA’s debit reform survey
Doug Kantor is counsel to the Merchants Payments Coalition.
202-429-3775 or email@example.com