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Montana CU CEO tells local press Interchange limit hurts consumers
BILLINGS, Mont. (3/28/11)--If the federal government continues with its plan to impose limits on debit card interchange fees, the move would hurt millions of consumers nationwide, a CEO for a Montana credit union wrote in a recent guest column in a local newspaper. “For 76 years, Billings FCU has represented the financial interests of its members, currently standing at 8,500 individuals in the Billings community,” wrote Tom Boos, CEO of Billings (Mont.) FCU. “As CEO, I am writing to sound the alarm that the federal government is on path to imposing new regulations on debit cards. I fear it is going down a risky path that could harm millions of people who belong to credit unions or use community banks” (Billings Gazette March 20). The largest U.S retail chains are behind this regulation and want the government to cap the fees they pay to accept debit cards, Boos wrote. Retailers have spent millions lobbying for this rule, because the biggest 2% of retailers stand to be recipients of a “$12 billion windfall--every year,” he added. “Small institutions like mine are able to issue free debit cards because of the interchange fees merchants pay for accepting them,” Boos wrote. “It is a system that works for everyone from the consumers and small businesses to credit unions and major banks. The fees level the playing field and allow our members the same zero-cost convenience enjoyed by customers of the largest financial institutions. They cover security costs, fraud protection and the vast network itself. Moreover, they permit credit unions to continue providing important services to our members. “If the retailers’ lobby is not stopped, community banks and credit unions around the country may have to increase their fees and rates just to cover debit services,’ Boos added. “Otherwise, we will have little choice but to create new restrictions or limit debit card use. Some of us may have to stop issuing cards altogether. That could spell the death of smaller financial institutions.” The Credit Union National Associations (CUNA) opposes the cap on interchange fees and has told federal lawmakers that such action would harm consumers by driving up costs of debit cards, limiting consumer options, competition and technological innovation. Interchange fees allow business costs, including the risk of consumer nonpayment, to be shared by the payments participants, CUNA says. To read the guest column, use the link
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