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IWSJI CUs others would pay price on interchange controls
NEW YORK (10/7/09)--Credit unions, consumers and community banks will foot the bill if Congress decides to put price controls on interchange fees, says The Wall Street Journal. In a Thursday opinion piece, John Berlau, director of the Competitive Enterprise Institute's Center for Investors and Entrepreneurs, points to 7-Eleven Inc. and other retailers as culprits in forcing “big government down the throats of American consumers. “If Congress acts on 7-Eleven’s misleading petition to put price controls on interchange fees, consumers will pay the price through the reduction of credit card reward programs such as frequent flier miles, and the possible return of annual fees,” Berlau wrote. “Credit unions and community banks will pay the price, too, in higher costs that will make it more difficult to offer cards at all. This could force their customers to abandon their local lending institutions if they want the convenience of credit and debit cards. “Contrary to the spin of the 7-Eleven and other big retailers, interchange fees, also called ‘swipe fees,’ are only levied on merchants, and none of the major legislation currently before Congress would require retailers to pass on one penny of their resulting savings to consumers,” Berlau added. “Australia’s recent experience with interchange price controls, for example, resulted in no tangible benefits--but plenty of added costs--for consumers down under.” Mastercard Inc. and Visa have come out against 7-Eleven’s position on interchange fees. MasterCard released a study that claims consumers were misled by a petition intended to drum up support for interchange fee regulations (News Now Oct. 2). Visa also weighed in on the interchange debate, saying that legislators and the public should not be swayed by the showy delivery of 15,000 booklets by 7-Eleven executives of signatures supporting interchange fee reforms (News Now Oct. 5). CUNA has spoken in favor of the current interchange fee structure, saying that regulating interchange fees would adversely affect consumers, competition and technological innovation. CUNA also has highlighted the positives of interchange fees, saying that the fees help credit unions cover their expenses and losses while offering merchants a guaranteed source of payment at the time that the transaction is completed (News Now Aug. 10).


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