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Hispanic Chamber adds support for interchange study
WASHINGTON (3/17/11)—The U.S. Hispanic Chamber of Commerce (USHCC) has added its voice to those calling on Congress to instruct the Federal Reserve to study the real-world impact of pending interchange fee changes before implementing this provision of the Dodd-Frank Act. USHCC President/CEO Javier Palomarez said in a recent letter to Senate and House leaders that the Fed should move with caution as it devises a scheme to implement Dodd-Frank language that requires the agency to set debit card interchange fees that are “reasonable and proportionate” to the provision of the service. The letter was sent to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The USHCC advocates for nearly three million Hispanic-owned businesses nationwide and represents 200 separate local chambers of commerce. The Fed’s proposal would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction. Issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions, but there is great concern that this proposed exemption would not work as planned. Palomarez said that curtailing debit-related revenues for many issuers would increase the cost of providing and maintaining debit accounts, “thereby limiting the ability of small communities to be able to offer, accept and use debit as a form of payment.” He added that “without a thorough examination of the unintended effects” of the interchange amendment, “the Hispanic community – which relies heavily on debit cards – will suffer a significant burden. “ The USHCC CEO noted that many in communities that his group serves could be pushed out of the banking system and toward more expensive and often predatory check cashing businesses if the loss of debit revenue pushes local financial institutions to stop offering debit card programs. Palomarez noted that many of the un-banked or under-banked, and the merchants that serve them, benefit from the debit transactions. He added that consumers and merchants also benefit from the convenience, immediate access, and security that debit programs offer their members and consumers. Debit card programs also offer “a path towards the financial mainstream” for many individuals and provide a guaranteed payment option for merchants, he said. Legislation that would delay the implementation of interchange changes was introduced in the Senate and House on Tuesday. The two bills would also order regulators to study the impact that the proposed interchange changes would have on credit unions, small issuers, consumers and merchants. CUNA President/CEO Bill Cheney said earlier this week that the proposed interchange delays give credit union members and other consumers "a ray of hope that the debit card programs they have come to appreciate may continue unchanged, at least for the short term." (See related March 16 story: Senate, House bills would delay Fed interchange plan)


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