ABA Statement on Fed Interchange Rule

Source: www.aba.com

By Frank Keating, ABA president and CEO

“While price controls remain an anathema to free market principles, the Federal Reserve has taken a significant step in reducing the harm that could have resulted from the proposed rule.

We commend the Board for recognizing that there are a whole range of costs for which banks should receive reimbursement, including fraud losses, network fees, certain fixed costs and fraud prevention costs.  We likewise commend the Board for delaying the effective dates for compliance with this complex rule.  It is clear that the Board benefited from the input of bankers, policymakers and other commentators.

“The final rule still represents a 45 percent loss in revenue that banks use to provide low-cost accounts to our customers, fight fraud and maintain our efficient U.S. payments system.  This remains a real concern to banks everywhere and the consumers and communities they serve.  Consumers will still feel the impact of this direct transfer of costs from big box retailers to everyday Americans.  Consumers will see higher fees for basic banking services, and banks – particularly community banks – will still feel the revenue pressures that this rule will cause.

“ABA will be watching closely to determine whether market incentives created by this rule inspire retailers to drive business away from community banks, a move that would cause real harm to those institutions and the communities they serve.  We will also watch to see whether retailers reward customers with lower prices from their billion dollar windfall or simply pocket the money.

“We will continue to aggressively advocate for remedies that will mitigate any harm caused by this regulatory action.”

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About American Bankers Association
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $13 trillion banking industry and its two million employees. The majority of ABA’s members are banks with less than $165 million in assets. Learn more at aba.com.