CUNA is thanking two members of Congress for circulating a "dear colleague" letter among Republicans opposing legislation to shift "interchange" revenue from financial institutions to merchants.

Reps. Jim Sensenbrenner, R-Wis., and Jason Chaffetz, R-Utah, are circulating the letter.

"We thank Reps. Sensenbrenner Chaffetz for taking this step and recognizing how important interchange is to card-issuing credit unions," said CUNA President and CEO Dan Mica. "Credit unions appreciate their leadership for standing up for their members nationwide who carry a credit union-issued debit card or credit card in their wallet. We will continue to reach out to policymakers to share the credit union perspective regarding interchange."

Following is the complete text of the Sensenbrenner/Chaffetz letter:

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Oppose H.R. 2695 -- the Conyers/Durbin Payment Card Fee Shifting Bill

Dear Republican Colleague:

We recently received a Dear Republican Colleague letter from our good friend, Rep. Bill Shuster, urging us to cosponsor H.R. 2695. This bill, introduced by Chairman Conyers, would allow merchants to form a cartel to negotiate with banks and credit card companies in an anticompetitive manner. Senator Durbin has introduced similar legislation in the Senate. H.R. 2695 will result in a shift of payment card acceptance costs to consumers, community banks, and credit unions.

Like you, we support the merchants in our districts and believe less taxation, less regulation, and less government intervention will result in greater entrepreneurial activity and economic growth for all. Free markets, not government favoritism or preferences, should be the rule. We should resist the temptation to mediate every perceived problem or concern with the market, particularly when there are adequate legal remedies already available.

We, too, have heard from merchants regarding concerns they have with so-called "interchange fees," which are the fees paid between an issuing (cardholder's) bank and the acquiring (merchant's) bank. Merchants have alleged, both in congressional testimony and in federal court, that banks and credit card companies have engaged in anticompetitive behavior. They are pressing their claims in a major antitrust class action lawsuit pending in the Eastern District of New York. Because there are adequate remedies in current law to address merchants' claims, Congress should not intercede.

On the merits, merchants receive tremendous benefits from payment card acceptance. These benefits include a shift of credit risk from the merchant to the credit card issuer, increased sales, secure, certain, and immediate payment, outsourcing collections, and other benefits. These services have costs, and merchants should pay their fair share of the costs for those benefits.

In Australia, where the government imposed artificial restraints on interchange fees, there is no evidence that retailers passed on any savings to their customers, who also paid higher prices for credit and debit and received fewer rewards and benefits. Congress has already passed a major restructuring of the credit card market which many predict will raise rates and fees for those who have good credit ratings and may begin to phase out rewards and other benefits cards. Now is not the time to increase that burden on the tens of millions of cardholders throughout the country.

Because the Conyers/Durbin credit card fee bill will hurt consumers, small banks, and credit unions, and because there are remedies in current law for the alleged problems with the payment card system, we urge you not to cosponsor H.R. 2695.

Sincerely,

F. James Sensenbrenner, Jr.

Member of Congress

Jason Chaffetz
Member of Congress