WASHINGTON (7/16/08)—In advance of a vote expected today on the Credit Card Fair Fee Act (H.R. 5546), the Credit Union National Association (CUNA) blanketed House Judiciary Committee with letters in opposition to the bill that would give merchants an antitrust exemption to negotiate interchange fees. “We strongly urge you to oppose H.R. 5546, a bill that would negatively affect the interchange credit unions rely upon to support their debit card and credit card programs,” CUNA President/CEO Dan Mica urged in the letter sent to each member of the committee.
The CUNA letter noted that 97% of the country’s approximately 90 million credit union members belong to a credit union that issues debit cards. Eighty-three percent belong to a credit union that issues credit cards. “Credit unions can offer these products because of interchange, the transaction fee that flows from the merchant, through its bank, to the credit union that issued the card to the consumer. “Interchange helps the credit union cover its expenses and losses. Merchants benefit as they are guaranteed payment at the time the transaction is completed,” Mica wrote. But now, Mica pointed out, merchants want more and are pushing for H.R. 5546. “Under H.R. 5546, merchants win and consumers lose. Consumers will lose as credit unions reassess their ability to offer convenient debit cards and competitive credit cards as interchange is reduced under the provisions of H.R. 5546. “In addition, any reduction in interchange is not passed through to the consumer. Only the merchants win under H.R. 5546,” the CUNA leader warned. H.R. 5546 has a companion bill (S. 3086) of the same name pending action in the Senate. Additionally, Rep. Peter Welch (D-Vt.) has introduced a bill to require credit card companies to disclose their interchange rates, terms, and conditions to consumers and businesses. CUNA, all members of the Electronic Payments Coalition and the U.S. Department of Justice are among opponents of the "fair fee" legislation. CUNA believes regulation of interchange fees would not only harm consumers but also would adversely affect competition and technology innovation.