News from the Wire

Electronic Payments Coalition says Durbin Amendment carve-out won't work

Thursday, January 13, 2011 — 15:03:04 (EST)

Washington, Jan. 13, 2011 -- Recent media reports have mischaracterized the impact of a so-called "carve out" for community institutions from the Federal Reserve's proposed rule on debit interchange fees. Below is a statement from the Electronic Payments Coalition spokeswoman Trish Wexler, clarifying the position of our members, which include credit unions and small community banks that fall below the $10 billion threshold and supposedly benefit:

"The so-called 'carve out' for smaller card issuers will simply not work, given the way the law is constructed. Merchant discrimination and market forces will pressure small issuers out of the marketplace and consumers will be left with fewer options. Let's be clear – this was added to secure votes on an amendment that was a gift to the top 1.5% of giant retailers who accept 81% of debit volume. You cannot decimate the economics of a thriving, growing market like debit cards and then expect to protect a portion of the market from the fallout. Even the Federal Reserve staff who drafted the rule acknowledged that smaller financial institutions may not ultimately be protected."

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Source: Company press release.