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Debit Card Rewards


The Durbin Amendment to the Dodd-Frank Act has put debit interchange fee income for financial institutions with more than $10 billion in assets (and, very likely, all financial institutions) in jeopardy. If section 1075 of the act goes into effect, debit interchange fees would be capped at 12 cents per transaction and the debit market would be opened to new competition with new requirements for routing and network exclusivity. Because debit interchange is at risk, with the details still unknown, some CUs are looking at debit card rewards programs to increase usage and encourage more profitable behavior. Many credit unions have successfully partnered with card suppliers, fostering profitable member behavior while providing attractive member benefits. The benefits of a rewards program for the credit union include: 1. increased interchange revenue, 2. increased activation and spending, 3. increased brand recognition, and 4. enhanced cardholder loyalty. An important part of your debit rewards program should be working with local merchants.

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