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N.J. CUs brace for interchange impact
TRENTON, N.J. (8/3/10)--A Sunday article in The Times of Trenton, N.J., examines the federal financial reform bill signed last week by President Barack Obama--in particular, the bill’s interchange language and its impact on credit unions. Titled “Credit Unions Brace for Impact of Changes in ‘Swipe Fees,’” the article explains that the bill’s interchange provisions could force credit unions “to institute new fees for checking and savings accounts and reduce incentives for customers, hurting the general public who the bill is designed to protect.” “The consumers certainly did not win on this bill on interchange fees,” Paul Gentile, president/CEO of the New Jersey Credit Union League, told the newspaper. One provision in the new law requires the Federal Reserve to limit interchange or “swipe fees” that merchants pay financial institutions when their customers use debit cards, the league said. The fees must be set at a level “reasonable and proportional to the processing costs,” but it is unclear what those levels will be. That is why credit unions are concerned that the card networks that process debit card transactions will apply the new fee limit to all financial institutions, depriving them of funds needed to provide and oversee debit cards, the league said. “That could have a very significant impact on the smaller institutions that rely heavily on the income to cover the program costs to monitor fraud and to issue plastic,” Andrew Jaeger, CEO of the Credit Union of New Jersey in Ewing, told the paper. To read the article, use the link.
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