WASHINGTON (4/29/10)--During a Wednesday House Judiciary Committee hearing on potential interchange fee legislation, John Blum of Chartway FCU said if interchange-related revenues drop, credit unions and small financial institutions would “face an impossible decision of raising rates, eliminating rewards programs, or stopping their card programs altogether.” Blum, testifying on behalf of the Electronic Payments Coalition, said credit unions “typically offer debit and credit card products to their customers at or below margin as a loyalty-building and customer-service tool.” Chartway is based in Virginia Beach, Va. Over one dozen committee members took part in the hearing, including Debbie Wasserman-Schultz (D-Fla.), who asked testifying merchant representatives if they could ensure that consumers would realize savings if, as they are proposing, interchange fees paid by merchants were reduced. The witnesses said that they could not guarantee that their prices would decrease if interchange fees were reduced. Overall, many committee members expressed concern over granting merchants an antitrust exemption and the potential harm it would do to consumers and smaller institutions, including credit unions. In a written statement for the hearing record, the Credit Union National Association (CUNA) said that H.R. 2695, the "Credit Card Fair Fee Act of 2009," could force credit unions and other smaller institutions to “re-evaluate their credit and debit card offerings, and possibly exit the market” if those institutions are forced to accept lower interchange fees. This would result in consumers having fewer credit and debit cards from which to choose, forcing them to rely on only a handful of large issuers for credit and debit cards, CUNA added. While supporters of the legislation say that the savings gained by merchants would be passed on to consumers, CUNA said that “granting merchants an anti-trust exemption on interchange fees is more likely to increase credit and debit cards costs that consumers bear.” H.R. 2695, the "Credit Card Fair Fee Act of 2009," which was introduced by committee chair Rep. John Conyers Jr. (D-Mich.), would permit merchants to negotiate interchange fees with financial institutions via an antitrust exemption. Though House action on interchange fees is not expected to be taken any time soon, legislators are reportedly working to add similar legislation to the Senate financial regulatory reform bill. Rep. Bill Delahunt (D-Mass.) called on Conyers to move to a markup of the legislation quickly, but no commitment was made. CUNA has fiercely opposed merchants' proposals that would affect interchange fees. Interchange reflects a merchant's fair share of the costs of the convenient card system and supports everything from re-issuing cards compromised by merchant data breaches to providing a call center to contact if a card is lost or stolen. CUNA testified at a previous interchange hearing, which was held in October 2009 before the Financial Services Committee. For the CUNA statement, use the resource link.