WASHINGTON — The Defense Credit Union Council is asking the National Credit Union Administration to clarify what protections federal and state-chartered credit unions have against state laws restricting interchange fees and whether additional federal action may be needed to protect credit unions providing payment services across state lines.
In a letter Thursday to NCUA Chairman John Crews, DCUC said the agency should assess existing federal protections, identify differences between federal and state credit union charters and determine what issues remain unresolved as states consider restrictions affecting interchange and other payment-related fees.
The request follows a Sept. 17 statement from the Conference of State Bank Supervisors supporting a Federal Deposit Insurance Corp. proposal addressing parity between out-of-state, state-chartered banks and national banks, including services provided without maintaining a physical branch in every state.
DCUC said it is seeking clarity on whether similar concerns involving interstate financial services need to be addressed for credit unions under the separate federal and state laws governing them.
“We are asking NCUA to explain what protections already exist, where they differ by charter, and what questions remain unresolved,” DCUC Chief Advocacy Officer Jason Stverak said. “Our letter does not assume that a bank-specific framework automatically applies to credit unions. It asks the agency to identify the options available under the separate laws governing credit unions.”
NCUA’s Earlier Interchange Action
DCUC pointed to an interim final rule issued by NCUA in June clarifying federal credit unions’ authority to receive non-interest income, including credit and debit card interchange fees.
The rule, which took effect June 30, addressed the preemption of state laws affecting non-interest charges and fees received by federal credit unions. DCUC said the codified regulation also addresses compensation received through payment networks, intermediaries and other third parties.
DCUC is now asking NCUA to assess whether further clarification is necessary regarding federal credit unions providing interstate payment services.
The organization also wants the regulator to conduct a separate review of protections available to federally insured, state-chartered credit unions and explain any coordination taking place with other federal financial regulators.
DCUC asked NCUA to distinguish between protections or actions available under existing federal authority and issues that could require action by states or Congress.
Compliance Costs Sought
DCUC also asked NCUA to consider the potential costs to credit unions if different state interchange requirements apply to institutions providing services across state lines.
“We would welcome an assessment of direct compliance costs, costs transmitted through service providers, and any differences by institution size,” Stverak said. “The inquiry also asks how potential action would interact with consumer-protection, privacy, and safety-and-soundness requirements.”
The issue is of particular concern to defense credit unions because their members can move frequently between states or be deployed overseas while continuing to use accounts and payment services provided by their credit unions.
DCUC said Thursday’s request continues a series of communications it has made this year concerning interchange, payment processing and federal preemption.
The organization sent a May 29 letter to the Office of the Comptroller of the Currency, a June 22 letter to the House Financial Services Committee and July 8 comments to NCUA.
According to DCUC, those communications addressed federal preemption, payment-processing requirements, compliance concerns facing smaller financial institutions and the ability to continue serving members who move between states or deploy overseas.
Written Response Requested
DCUC requested a written response from NCUA explaining the agency’s view of the issues.
The organization also offered to meet with Crews and NCUA staff, along with representatives of federally chartered and state-chartered defense credit unions, to discuss operational issues and provide additional information.
