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EPC broadcast highlights CUs small inst. interchange concerns
WASHINGTON (6/10/10)—The Electronic Payments Coalition (EPC) brought together representatives of the Credit Union National Association (CUNA) and other groups representing small financial institutions to discuss the dangers government limits on interchange fees would pose for consumers, credit unions and small community banks. The focus of the EPC’s live online video news conference Wednesday was an amendment included in the Senate version of a broad financial regulatory reform package (S. 3217) that would require the Federal Reserve to set interchange fees. Addressing the concerns of credit unions, CUNA President/CEO Dan Mica explained that, if passed into law, government control of interchange fees is going to cost consumers “a lot of money.” If merchants are able to deflect some of the cost of using the electronic payments system, “there are millions, if not billions, of dollars of costs here and someone has to pick it up,” Mica said. “Credit unions will have to pass on the costs. Credit unions are not-for-profit financial institutions. The costs will have to (be covered) from somewhere,” Mica said. He noted that for their 100-year history, credit unions have been well known for charging smaller fees for financial services. “This (change in interchange rules) would force us to charge more fees,” Mica explained. "This (interchange provision) truly isn’t about consumers the way it is constructed right now. It’s about the big-box retailers trying to change the rules of the game and reap some really heavy windfall profits.” The CUNA leader also pointed out that the interchange amendment, attached during the last minutes of debate on the Senate bill, has no place in a regulatory reform package that is meant to address failures in the financial system that resulted in the economic meltdown. Worse yet, he added, is that interchange provisions have not been vetted through the congressional hearing process, and are not backed by either the White House or U.S. Treasury Department. “Our own federal agency that oversees credit unions just told me this morning they don’t have enough data to even comment on this. This is not the time to move forward on this.” CUNA Board Chairman Harriet May added another warning on behalf of consumers, saying that the poorest consumers could pay the heaviest price if merchants start to set minimum purchases on pre-paid benefits cards—forcing those consumers to buy more than they need at that time to reach a minimum. May is also CEO of GECU in El Paso, Texas, a low-income designated CU. The interchange proposal would allow merchants to offer discounts for cash, checks or competing card brands, as well as set minimum or maximum limits on consumer purchases that use credit cards. “A leading advocate for pre-paid debit cards to assist the poor came out and said ‘don’t rain on the poor.’ It will force individuals to buy more. This is not wise spending, and it’s not a way to help the consumer,” May said. She was alluding to a letter to Congress from Russell Simmons, the co-founder of the hip-hop record label Def Jam and the developer of the RushCard, a reloadable Visa debit-card for low-income consumers (News Now 6/8/10). Also participating in the half-hour broadcasts were representatives of the Independent Bankers Association of America (ICBA) and the National Association of Federal Credit Unions. Speaking on behalf of small banks, ICBA President Camden Fine also raised concerns about unintended consequences of the interchange provision. He said thousands of community banks may find they cannot offer their members cards. “Customers will lose” as will small, mainstream merchants, Fine said. The press conference will be available on line. Use the resource link below.
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