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News Now

Washington
CUNA asks Senators to oppose interchange fee amendment
WASHINGTON (5/12/2009)—The Credit Union National Association (CUNA) on May 11 joined a trio of other financial services associations in opposing potential amendments to H.R. 627 that would affect current regulations on interchange fees, which is the fee paid by merchants for the benefits of card acceptance. Sens. Richard Durbin (D-Ill.) and Kit Bond (R-Mo.) are expected to offer an amendment that its supporters claim is intended to facilitate discounts on different types of payment transactions. However, CUNA warns the amendment would actually permit merchants to discriminate against payment cards issued by a particular financial institution, including community banks and credit unions. Merchants would be able to drive consumers to use of a certain type of card--perhaps a card issued by a “preferred” institution with which the merchant has an agreement, CUNA said in a letter sent to each member of the U.S. Senate. The letter was co-signed by the National Association of Federal Credit Unions, the American Bankers Association, and the Independent Community Bankers of America. It maintained that the interchange fee amendment could “reduce credit and the choices available to consumers.” It would do so by reducing the income that covers the extensive infrastructure costs, fraud risk, and nonpayment possibilities that are assumed by financial institutions involved in the payment system and therefore possibly force credit unions and community banks out of the credit card business altogether, the letter said. Rather than simply adopting the amendment, CUNA and its cosigners have asked the Senate, at a minimum, to agree to a Government Accountability Office study of interchange fees, as detailed in Sen. Chris Dodd’s (D-Conn.) substitute amendment to H.R. 627. CUNA has previously stated its opposition to any changes to interchange fee rules, saying that allowing the government to interfere in what should be a free market issue would harm consumers, merchants and financial institutions.


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