Despite repeated assertions that a debit card interchange capwould not really hurt credit unions, CUs have begun to outline thecap's impact for the Federal Reserve.

Illinois Democratic Senator Richard Durbin has written creditunion trade associations in his state that the amendment that bearshis name and authorizes the cap would not harm credit union's ofunder $10 billion in assets which are supposed to be exempt fromits provisions.

But in comments to the Federal Reserve about its proposedregulations which would implement the cap, credit unions of fewerthan $10 billion in assets have detailed the ways the cap wouldhurt their bottom lines.

"We have estimated that we stand to lose $402,000 a year ininterchange income from our members' debit card transactions ifthis Durbin bill is not amended," wrote Eileen Rivera, CEO ofSkyOne Credit Union. "Our net income was only $84,000 in 2010. Wewill find ourselves in a position of significant negative earningsif we don't reverse this piece of the bill."

Like others from the 26 credit unions that had written the Fedindividual letters as of Jan. 20, Rivera pointed out that theexisting cap did not come close to recognizing the overall costs ofrunning a debit card program, including particularly the cost offraud that card issuers bear on their own.

"One of the major costs associated with debit cards is fraud,"wrote Tabitha McDonner, a vice president with Southwest AirlinesFCU. " Financial Institutions bear the cost of fraud that occurswith debit card usage. Merchants are currently liable for only asmall portion of fraud that occurs - mostly online/mail/phonepurchases and have zero liability otherwise. Financial Institutionsuse the interchange income to protect consumers from incurringfraud losses. That cost factor was not considered in the currentproposal," she added.