We've noted before that credit unions and community banks are licking their chops over the marketing opportunity presented by Bank of America's new debit card fee. Some are even running edgy TV spots. The public backlash against the fee has been stronger than expected, and more customers seemed primed to move their accounts, though it's unclear just how big a deal Bank Transfer Day will be. Recall that financial institutions with less than $10 billion in assets are exempt from the Durbin Amendment, which reduced the interchange fees paid on debit card swipe transactions. So in theory, credit unions and small banks will not see a big cut to their interchange fee revenue, unlike bigger banks. But there's no good reason for people to assume that a credit union will never charge debit card fees. Credit unions are in fact on tricky ground when it comes to debit card fees, and they may not want to box themselves in by saying they will not ever charge such fees. The reality is that merchants may ultimately decide that they will not honor cards that retain the higher interchange fees. The result may be a de facto cut in the interchange rate that will be bad news for credit unions. At that point, they will likely be forced to raise rates. Indeed, before the amendment was finalized credit unions and community banks made clear that they would have no choice but to adjust rates if they were not exempt. All in all, merchants may decide to leave the rates alone for these issuers. But merchants are also under pressure, looking to shave every cent in costs. As of now, few think that merchants will be able to pass on savings to consumers as some hoped.     

For more:
- here's a look at what some credit unions are doing