ST. PAUL, Minn. (1/31/11)--The proposed cap on interchange fees will ultimately hurt consumers’ pocketbooks, Minnesota Credit Union Network President/CEO Mark D. Cummins warned readers of Finance & Commerce newspaper last week. A regular columnist in the Twin Cities publication, Cummins explained how reducing debit card interchange fees would hurt credit unions’ debit card programs. The Jan. 24 article, “Interchange Cap Will Ultimately Hurt Minnesota Consumers,” outlined the benefits that debit card programs offer to consumers and retailers. Cummins explained that these benefits come at a price to financial institutions, and retailers are asked to pay their “fair share” of this cost through interchange fees. A reduction in these fees would significantly impact the debit card features credit unions will be able to offer. “So what does this mean for your local credit union or bank? Reduced interchange fees will ultimately hurt small, locally based financial institutions and make it harder for them to meet the needs of their members, consumers and communities,” Cummins wrote. “For credit unions, this issue is not about making a profit; rather it’s about protecting the pocketbooks of Minnesota credit union members.” Cummins noted that market forces would likely erode the two-tiered pricing structure proposed by the Federal Reserve Board. He explained that merchants would eventually migrate to debit cards that offer the mandated lower-cost fees, which would ultimately force local financial institutions to reduce their interchange fees to remain competitive. The Credit Union National Association (CUNA) has estimated that up to 67% of credit unions would lose money on their debit card programs if the interchange regulations reduced interchange-related revenues by 40%. CUNA and credit unions have put out a call to scrap the Federal Reserve Board's plan to implement government restrictions on interchange fees. To read the column, use the link.