Reg II - Impact on small banks?

I keep hearing that the interchange fee caps will affect small banks (under the $10M threshold) but I'm trying to figure out how. In light of the list that the FRB posted yesterday for processors to use for seeing what institutions are exempt from the caps - can someone explain how small banks interchange fees will be impacted?

Is the thought process that the processors will not want to set up their systems to differentiate based on exempt/nonexempt issuers?

One thing for sure is it will affect the marketplace. Think about it, if Exxon is selling gas for $2.50/gallon, are you going to fill up there or at Gary's Gas House for $3.75/gallon -- Gary's Gas House would eventually have to lower their price to compete.

Last week, we had a teleconference with VISA. They said that there will be two pricing schedules, one for the big banks, and one for the exempt banks. But banks in both classes will see price changes.

They couldn't be any more specific, but I really don't think they are planning to revise our fee schedule upwards.

They also said to check the Fed schedule to make sure you are on the exempt list. We got an email yesterday with links to that list.

Exempt and Non-Exempt Financials

Here is the webpage that contains the lists of exempt and non-exempt financial institutions.