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State interchange bill meets CU opposition
MADISON, Wis. (4/27/10)--Any government intervention that results in the inability of small institutions to offer credit and debit card services to members would place credit unions at a huge disadvantage with their members, according to testimony in one of the states whose legislature is considering changes in credit card company practices. On Friday, the Georgia House Banks and Banking Committee heard testimony on HB 1456, a credit card interchange bill, from opponents of the bill, including the Georgia Credit Union Affiliates (GCUA), the Community Bankers Association, the Georgia Bankers Association and the Electronic Payments Coalition. The bill, introduced on March 22 by sponsors and co-sponsors with business ties, was heard in full committee but likely will go nowhere. "We are as confident as we can be with two days left in the session that this bill will not have any more traction other than the hearing," said GCUA Senior Vice President of Government Influence Cindy Connelly. She noted that the issue, which has been waged for years in Washington and in the courts, is beginning to surface in state legislatures across the country, such as Vermont, Colorado, Georgia and California, and the credit union system is taking steps to educate credit unions about the issues. For example, the Electronic Payments Coalition is hosting webinars on interchange, that discuss what interchange is and why it's important, myths and facts surrounding the interchange debate, and unintended consequences of proposals to regulate interchange fees. The next webinar is Thursday at 10a.m.-11 a.m. ET. For more information, use the link. No vote has been scheduled for the Georgia bill, since the date for crossover into the other legislative chamber has passed. However, Committee Chairman James Mills has indicated the issue could resurface (NACS Daily News April 26). The bill had aimed to:
* Provide retailers the ability to set different prices; * Determine if they can accept specific payment products, and * Reward retailers with fees and fines if an electronic payment system violated the
Testifying before the committee on behalf of credit unions Friday was Mike Culbertson, GCUA's chief advocacy officer. He noted that members demand credit and debit card services and credit unions offer these in direct response to members' needs and demands for convenience. Other points he argued:
* Government intervention would put smaller institutions at a huge disadvantage with members who expect their credit union to offer the services and could lead to members seeking an alternative provider. * A key feature is the universal acceptability of debit and credit cards worldwide. * Adopting laws impacting universal acceptance would confuses consumers, who will see problems of acceptability tied to the card. Consumers might not take time to understand problems that are due to anything else other than the card; they would seek a card from competitors. * Even the largest credit unions don't have negotiating power or opportunity to negotiate with merchants on interchange; they rely on the stability of the default schedules for most transactions. * The strength of any network is in rules that enable the widespread acceptance of cards, even from the smallest issuers.
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