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Cheney to iBankratei CUs concerned that interchange cap works
WASHINGTON (7/27/10)--President/CEO Bill Cheney continues to publicly highlight credit union concerns over recently enacted statutory provisions to regulate interchange fees and related issues, including in a recent article on bankrate.com. In the article, Cheney questioned whether a legislated interchange carve-out for credit unions with under $10 billion in assets would be truly effective. That carveout, which was avocated by CUNA, credit union leagues and credit unions, would apply to all but three credit unions. While it does appear that that carveout would benefit credit unions, Cheney said that he was unsure that large payment card companies would fully support a two-tier structure with separate sets of fee scales for larger and smaller institutions, respectively. Cheney added that smaller institutions such as credit unions could lose revenue due to the interchange changes, a circumstance that may force credit unions to increase member fees or reduce the amount of services they offer to those members. The bankrate.com story notes that the legislation will allow merchants to continue the practice of setting minimum payment amounts for credit card purchases, but that minimum may not exceed $10. The legislation wil also permit merchants to offer discounts for consumers that use preferred payment methods, the story added. The bankrate.com story also noted U.S. Government Accountability Office research which found that legislation that reduced interchange fees charged to merchants in Australia did not result in lower prices for consumers. The interchange legislation, which passed into law as part of a larger financial regulatory reform package, will allow the Federal Reserve to intervene in the setting of per-transaction swipe fees. CUNA, credit unions, and credit union leagues made thousands of individual contacts with legislators ahead of the regulatory reform vote, urging their legislators to oppose the interchange provisions. CUNA is communicating its own analysis on the interchange legislation to league and credit unions later this week, and will also be revisiting issues that it has already raised to Fed staff as well as flagging additional areas of concern in a letter to the Fed and other policymakers this week. For the full bankrate.com story, use the resource link.
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