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What's Next on the Interchange Debit Ruling
Tuesday, August 13, 2013 5:45 AM

According to the latest Advocacy blog post, the federal judge who struck down the Fed’s interchange rules will reportedly hold a hearing tomorrow about what should happen next with the Fed’s rules.

Representatives from the Credit Union National Association (CUNA) will be at the hearing in U.S. District Court in Washington, and we'll pass along any key information they uncover while there. In the meantime, CUNA is discussing the key concerns with members of Congress.

To recap, on the July 31 ruling in his “summary judgment,” the judge concluded that the Fed’s rules implementing the “Durbin Amendment” went far beyond the scope of the law and agreed with the arguments of merchants who brought the lawsuit against the Fed and its rules.

According to Bill Cheney, president and CEO of CUNA, "The ruling does not revoke the Durbin Amendment’s exemption for credit unions with less than $10 billion in assets from the law’s cap on interchange fees. But that exemption does not apply to a second, critical portion of the judge’s ruling affecting routing provisions. Under the Fed’s current rule, two unaffiliated routing networks must be available for every debit card."

Cheney quotes the court's ruling when he says that Congress intended for each transaction to be routed over at least two competing networks for each authorization method, not just two methods for every card as the Fed permitted. Cheney goes on to explain that the ruling could ultimately lead to reduced revenue for credit union debit card programs as merchants drive business to cheaper processing and as a result of higher routing costs.

The judgment is subject to a “stay” imposed by the federal judge himself, which means that the current Fed rules remain in effect; however, this Wednesday’s hearing could provide some insight into how long that stay will remain and whether the Fed will appeal.

In the meantime, CUNA and the Cornerstone Credit Union League are working to help credit unions understand what the interchange ruling means for their operations. You can find out more with CUNA's “Inside Exchange” video series. Their new episode focuses on the next steps surrounding the ruling, and they're developing special online educational events to help credit unions learn more and receive answers to their specific questions about the situation.

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