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CU System
IWSJI others note CUs stance on interchange fees
MADISON, Wis. (6/22/10)--Several media outlets, including The Wall Street Journal, noted credit unions’ stance on interchange fees. A House-Senate conference committee, which is hammering out a final financial regulatory reform package, is expected to take up the interchange issue today. The Credit Union National Association (CUNA) opposes a plan that would require the Federal Reserve to set interchange fees. The articles noting credit union efforts in opposition of the interchange plan are:
* The Wall Street Journal on Saturday, which said: “Local community banks and credit unions are likely to hang onto free checking longer than their bigger rivals. That is because such institutions will see less of a financial impact from some of the new regulations, and therefore may be under less pressure to add fees. Smaller banks often promote themselves as being customer-friendly, with products that are less complicated than those offered by big banks. One downside to smaller institutions is that they usually don’t have extensive ATM or branch networks. That means consumers who travel often could get stuck paying out-of-network fees for cash withdrawals if they use another bank’s machines. Such fees can add up quickly.” * Crains Cleveland Business (June 21-27), which mentioned that John Magill, CUNA senior vice president for legislative affairs, said retailers pay about 1.5% of a purchase in interchange fees. “Some of that money goes to the issuer--a credit union or bank," Crains said. "Some goes to a processor, such as Visa, and some is kept by the retailer. Those fees are meant to pay for maintenance of the card system. Fraud and other losses, under the new proposal, fees would be reduced drastically to cover only the cost of the transaction itself. Mr. Magill said that could cost credit unions between $35 and $50 per car per year.” * The TimesRecordNews of Wichita Falls, Texas, on Saturday, which reported opinions on interchange from the Texas Credit Union League. “While groups representing small businesses advocated for the amendment as a way to cap interchange rates and reduce costs to merchants, banks and credit unions are pushing back,” the newspaper said. “They claim that, despite a clause excluding institutions with less than $10 billion in assets, they will be severely affected by regulation. The exclusion includes 99% of banks and all credit unions ...” Winter Prosapio, spokeswoman for the Texas Credit Union League, told the newspaper, “Midsize and small banks and credit unions’ debit card programs often just break even. Small (card) issuers don’t gain the benefits of scale.”
The House on Monday offered alternative language on interchange for the final regulatory reform package. (SEE RELATED STORIES: New interchange language, same concerns, says CUNA; CUNA reviews House interchange alternative; urges CU opposition.) To read the articles, use the links.
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