Protect your credit union debit card. The Senate-passed amendment threatens your credit union's ability to offer cards and may lead to other fees!
Last week the US Senate approved the Financial Regulatory Reform Bill. This bill includes a provision that would mandate price controls on the interchange fees paid by merchants for accepting debit cards.
This bill has unintended consequences for credit union members and every consumer with a debit card in his or her wallet. In addition, consumers will not reap any benefit from the provision since merchants will not be required to pass the consequent savings on to the consumers. In fact, merchants successfully fought against an amendment that would have required those savings be passed on to consumers.
What can you do to help?
The interchange provision requires a more thorough review and does not belong in this bill. We urge you to oppose its inclusion in the final financial reform bill and hope you will ask conferees to keep this provision out of this bill. Contact your federal legislators TODAY and ask them to oppose the Senate-passed interchange provision.
MORE INFORMATION ABOUT THE PROVISOIN AND ITS IMPACT
What are interchange fees for? How will this provision affect them?
Merchants receive tremendous benefits when they choose to accept debit and credit cards as a form of payment. They are paid immediately, and they do not have to deal with cash or wait for a check to clear. Like electricity or rent, the interchange fee that the merchant pays is a cost of doing business. Government rate controls on interchange reduce the merchants’ responsibility to pay for the benefits received from the card payment system and will drive up costs for credit unions and their members.
How are credit unions and members impacted by the provision?
Credit unions incur significant expenses in operating card payment systems. For example, credit unions are responsible for administration of card programs, call centers, and reissuing cards in cases of merchant fraud. Interchange supports these costs. If interchange fees were reduced, credit unions and other small financial institutions would be forced to raise rates and fees for card services. Furthermore, there is no evidence to suggest that merchants would pass along any savings resulting from lower interchange to consumers.
This provision offers no real “exemption” or “carve-out” for credit unions; if it were included, merchants and big banks would set rates that would make it impossible for credit unions to compete. In the end, merchants could refuse to accept the credit union debit card you rely on for everyday purchases!
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