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Michigan Credit Union League Home » Information Services » Publications » News Articles  

MasterCard Says it Will Implement Two-tier Interchange System   (Misc News: August 18, 2011)

MasterCard will implement a two-tiered debit interchange fee system and will keep its existing market-based rate structure in place for financial institutions with less than $10 billion in assets, including credit unions.

In a conference call presented by MasterCard and CUNA, Shawn Miles, MasterCard’s global head of public policy, said that rates charged to credit unions are subject to change based on market forces. He added that the rates will be finalized prior to Oct. 1, CUNA News Now reported.

Miles also thanked credit unions and CUNA for their efforts to delay and change the debit interchange fee cap legislation, and said that the final rule was significantly improved due to their efforts.

MasterCard plans to establish its own online debit interchange registration system for its member institutions to denote if they are above or below the $10 billion-asset threshold. The card processor is planning to include in the registry the ability for institutions above $10 billion in assets to certify that they qualify to receive the extra penny for complying with fraud prevention standards.

The Fed's final debit interchange rule caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents, and allows an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with Fed-established fraud prevention standards. Credit unions and other institutions with under $10 billion in assets are exempt from the rule.


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