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Breach argues for interchange delay CUNA says
WASHINGTON (5/2/11)--Days after a widespread data breach occurred, the Credit Union National Association (CUNA) noted that the Federal Reserve’s interchange fee cap regulations would give merchants a profit windfall while leaving credit unions to “cover even more of the costs of merchant data breaches." The data breach in question happened when credit card numbers and other personal information of 77 million users of Sony’s online gaming platform PlayStation Network was compromised and potentially stolen last week by hackers. Credit unions are reissuing credit and debit cards to their impacted members just in case information has been compromised, and CUNA President/CEO Bill Cheney in the letter noted that “the expense for taking this action is not reimbursed by Sony; rather, credit unions rely on interchange revenue to cover the cost of debit program administration, including in these circumstances, reacting to a merchant data breach.” The CUNA letter encouraged Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) to continue to fight for an interchange delay. A Senate bill introduced by the legislators would delay implementation of the interchange legislation by two years and would order federal regulators to study the impact that the interchange changes could have on consumers, financial institutions, and others. The bill, S. 575, has 16 co-sponsors. The proposed interchange rule would lower the maximum fee charged per debit card transaction to 12 cents, or lower. The statute, as enacted, would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. The effectiveness of the proposed exemption has been hotly debated, and many analysts agree that the statutory exemption will not work as intended. Without meaningful protections in the regulation ensuring that a planned exemption for credit unions and other financial institutions with $10 billion or less in assets is workable, the Fed’s proposed rule “will affect all debit-card issuing credit unions,” Cheney wrote. “Data breaches like the one we learned about this week will only exacerbate the problem for credit unions because the proposal would not allow these costs to be taken into consideration.” For the full letter, use the resource link.


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