An examination of the potential effect of the Durbin Amendment
on the Credit Union debit issuing market.
A Mercator Advisory Group Research Brief
Sponsored by: Card Services for Credit Unions®
For debit card issuers of all types, the Durbin Amendment represents one of the most impactful pieces of legislation to come out of Congress in many decades. As part of the new financial reform law passed in the Senate and signed by President Obama on July 21, 2010. This following analysis is based on the language of the amendment as of June 29, 2010, when it was presented to the Senate by the House Financial Services Committee. It should be noted that the passage of the Durbin Amendment is simply the first step in the change process. The Federal Reserve is now working on what will be the final rules establishing a regulated debit card interchange fee, and finally, the card and EFT networks will have to implement the new rules. Therefore, issuers should remain cautious with regards to making material changes to their portfolios until the final regulatory and operating rules are published.
Clearly, the debit card product is here to stay. Consumers have come to rely on their debit card as a primary access tool to their deposit account. Therefore, the purpose of this paper is to assist Card Services for Credit Unions® members, in preparing for the provisions of the amendment, discuss the potential impact to their debit line of business, and provide actionable suggestions they might consider for addressing the potentially negative revenue impact that may result from the enactment of this Amendment.