Over the last few years, credit unions have significantly increased
their reliance on fee income - four years ago non-interest income
made up 10% of total revenue versus 15% in 2002. Recently, though,
credit union fee income took a potential hit, as retailers and the
two major credit card associations reached a settlement on interchange
fees. The most immediate impact on the bottom line will come from
a reduction in debit interchange fees. To better gauge the extent
of this impact, Callahan & Associates has begun surveying credit
unions on their sources of fee income.
The forty-seven credit unions that have responded thus far indicated
that 17.6% of their fee income is generated via debit interchange
fees. This is currently second only to NSF charges as a fee income
generator, but this interchange income will surely decline.