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Interchange fees help consumer choice CUNA will testify today
WASHINGTON (10/8/09)--Both interchange fees and the Credit Card Accountability, Responsibility and Disclosure (CARD) Act will be discussed in a hearing before the House Financial Services Committee today, with Mark Caverly, executive vice president of Raleigh, N.C.-based Local Government FCU testifying on behalf of the Credit Union National Association (CUNA) and the Electronic Payments Coalition (EPC). In prepared testimony, Caverly said that the current card payment system allows his credit union to grant its members “the opportunity to deal with a local institution they know and trust” while also “gaining access to a global payments system,” and also allows his credit union to “compete with the largest financial institutions” while addressing the “expenses and responsibilities” of a credit card program. The hearing will focus on H.R.2382, the Credit Card Interchange Fees Act of 2009, which would aim to limit so-called unfair practices in electronic payment systems, and H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, which would move up the effective date of some portions of the CARD Act to December of this year. Commenting on H.R. 2382, the EPC in a recent release called that legislation “one of the most egregious assaults on consumer protection that this country has seen in some time.” The bill, which the EPC said “details precisely how consumers would end up paying more,” is an outlet for retailers to continue to use a service that brings them “more sales, higher profits and reduced acceptance,” while leaving their customers to “pick up the tab.” CUNA has publicly opposed any interchange fee legislation, saying that any restrictions on interchange fee negotiation would ultimately harm consumers by limiting options and hindering competition and technological innovation. H.R. 3639 will set an earlier effective date for the CARD Act and would push forward the effective dates for CARD Act provisions addressing gift cards, reviews of past consumer interest rate increases, and requirements addressing the penalties and fees that can be assessed to credit accounts to Dec. 1. While CUNA is not scheduled to testify on H.R. 3639, CUNA did express opposition to the bill in a letter sent Wednesday to Committee Chairman Barney Frank (D-Mass.) and Ranking Member Spencer Bachus (R-Ala.). In the letter, CUNA stated that the accelerated compliance timetable presented in H.R. 3639 may “raise even greater compliance concerns for credit unions,” as they “do not typically run their own credit card operations” and “cannot simply pour more resources into their programs to comply on short notice.” Credit unions would also need greater leeway to test some of the data processing changes associated with implementation of the CARD Act, CUNA President/CEO Dan Mica added. Other witnesses scheduled to testify at the hearing include Independent Community Bankers of America representative Ann Duplessis and National Association of Federal Credit Unions President/CEO Fred Becker. Several retail and banking industry representatives and academics are also scheduled to appear during the hearing. To read the CUNA letter in full, use the resource link.


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