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W.Va. newspaper editorial Interchange needs more study
HUNTINGTON, W.Va. (4/8/11)--A prominent Huntington, W.Va., newspaper has sided with credit unions regarding debit card interchange fees, saying the matter needs more study before any change to the fee structure is made. “The proposal is to cut the fees to the retailer from an average of 44 cents per transaction now to about 12 cents,” said The Herald-Dispatch (April 4). “But there is a growing concern that the Fed did not look at the ‘big picture’ when it developed the lower limits. Some argue that the legislation, which was proposed as a benefit to consumers, may have just the opposite effect. Consumers could end up paying more for their debit-card use or seeing restrictions on that use. The higher consumer fees could have a big impact on lower-income families. “That is certainly the way the plan is viewed by representatives of many smaller banks and credit unions, which typically have a higher per transaction cost than big banks,” the editorial added. U.S. Rep. Shelley Moore Capito (R-W.Va.), who is leading the effort for a bipartisan bill that would delay the proposal’s implementation for a year, said the matter deserves another look, the editorial noted. Availability issues, credit issues and lower-income people having more charges on checking accounts and therefore lower use of their debit card are ramifications that weren’t considered in the original rule, or the amendment. Therfore, Congress should postpone any ruling to obtain a more accurate study, Capito said last week, reported the newspaper. The newspaper agreed. “That [Capito’s viewpoint] makes a lot of sense. One thing we have learned from the country’s recent financial problems is that what is best for the largest businesses is not always best for everybody. This plan needs another review,”’ the editorial concluded. And, in another prominent West Virginia newspaper, The Charleston Gazette, Kenneth R. Watts, president of the West Virginia Credit Union League, wrote a letter in March that also agreed with Capito’s position on interchange. “Congresswoman Capito and her colleagues have it right by slowing this process down and proceeding cautiously,” Watts wrote. “Credit union members, and bank customers who rely on their debit cards to make essential purchases without writing checks, should not have to pay higher fees especially since debit cards help increase sales and provide convenience to merchants who voluntarily accept them. Also, these financial institutions assume all of the risk of fraud and provide immediate payment to merchants. “Now is not the time to raise unnecessary fees on consumers. It is time to thank lawmakers like Congresswoman Capito who want to proceed carefully on this matter,” he concluded. The Credit Union National Association (CUNA) opposes the cap on interchange fees and has told federal lawmakers that such action would limit 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 editorial and letter, use the links.
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