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Washington
CUNA shows real-world interchange impact to Hill staff
WASHINGTON (7/28/09)--Cynthia Prestandrea of Prince George's Community FCU told representatives of congressional conservative “blue dog” Democrats that income from interchange fees is pivotal to the “survival” of her credit union. She was representing the Credit Union National Association at the briefing. Prestandrea, who currently serves as CEO, said that interchange fees represent 21% of the income collected by her $100-million-in-assets, Maryland-based credit union. Interchange income helps her credit union handle routine business expenses and allows her credit union to compete with the largest financial institutions, which have far greater resources, “on a daily basis,” Prestandrea added.
Click to view larger image Prince George's Community FCU CEO Cynthia Prestandrea (shown here with attorney Mike McEneny of the Electronic Payments Coalition) makes her case for continuing to allow the free market to set interchange fees. She told "Blue Dog" Democrats that interchange fees provide 21% of the income to Prestandrea's credit union, which holds $100 million in assets. (CUNA photo)
Eliminating or significantly reducing interchange fees, as discussed in some recent proposed legislation, would result in higher member fees for financial services and “would have a significant impact” on her credit union’s ability to offer members a debit card attached to their checking account. An inability to offer debit cards attached to checking accounts would essentially render her credit union obsolete, Prestandrea said. Attorney Mike McEneny, who spoke on behalf of the Electronic Payment Coalition, said that altering the structure of interchange fees could ultimately result in reduced credit availability and higher costs, two outcomes that would adversely impact both individual consumers and the economy at large. 7-Eleven is one merchandiser involved in the interchange fee debate, and it is looking to send a message about government limits on interchange fees to the credit card industry and legislators by using its 6,300 stores to attempt to collect 1 million customer signatures by August 10. Though the House and Senate legislation that would allow merchants to renegotiate interchange fees with financial institutions has not seen much action recently, the legislation has not been abandoned. H.R. 2695, the "Credit Card Fair Fee Act of 2009," offered by Reps. John Conyers, Jr. (D-Mich.) and Bill Shuster (R-Pa.), would permit merchants to negotiate interchange fees with financial institutions via an antitrust exemption. Sen. Richard Durbin (D-Ill.) in early June introduced S. 1212, The Credit Card Fair Fee Act, which would establish a panel of three Electronic Payment System Judges to intervene in disputes between card service providers and merchants regarding fees set for use of the electronic payments system. There was speculation that Durbin would attach the bill to the Financial Services Appropriations Act for fiscal year 2010, which was approved earlier this month, but that legislation was not included in the final appropriations bill. However, Durbin has consistently stated his intent to take action on the interchange issue. CUNA has recommended that legislators wait for the results of a Government Accountability Office review of interchange fees before they act.


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