ICBA’s Anne Balcer met yesterday with Federal Reserve Governor Michelle Bowman on the agency’s proposal to lower debit card interchange fees. Fed Governor Bowman, who has spoken out against the proposal, said the agency’s cap on debit card interchange puts smaller issuers at a disadvantage.

Fed Proposal: The Fed proposal would lower the maximum interchange fee that covered debit card issuers may receive for debit card transactions under Reg II by 30% and establish a regular process for updating the amount every other year based on issuer cost data.

ICBA-Fed Meetings:

  • Yesterday’s meeting followed previous meetings last week with Chair Jerome Powell, Governor Christopher Waller, Fed Vice Chair Philip Jefferson and Governor Adriana Kugler, where ICBA raised questions about the Fed’s data.

  • During a meeting in early April with Fed staff, Jesse Honigberg, executive vice president at Customers Bank in Reading Pa., discussed the impact of the Fed’s proposed 30% interchange cut.

ICBA Advocacy: ICBA has repeatedly expressed deep concerns about the impact of the proposal on community banks and previously urged the Fed to reject merchant requests for further changes to Reg II. ICBA and other groups recently released a document correcting myths surrounding the proposed changes and spotlighting the harmful impact of interchange regulations.

Congressional Challenges: Reps. Blaine Luetkemeyer (R-Mo.) and Andy Barr (R-Ky.) recently asked the Government Accountability Office to study the potential impact of the Fed’s proposal on the availability of low-cost banking products and banking services for low-income consumers. Luetkemeyer has separately introduced ICBA-supported legislation directing the Fed to stop and study its proposed changes before finalizing the rule.

Call to Action: ICBA is encouraging applicable community bankers to submit responses to the Federal Reserve’s 2023 Debit Card Survey on debit processing, chargeback volumes, fraud losses, and fraud prevention measures ahead of the May 1 deadline. With data from covered community banks important to the debit card interchange conversation, community bankers with questions about the 2023 survey can reach the Fed at [email protected].