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Interchange legislation could be introduced this week
WASHINGTON (3/15/11)—The Credit Union National Association (CUNA) has called on Congress to stop, study and start over on planned interchange fee regulations, and legislation that would do just that could be introduced later this week. A number of recent press reports have indicated that Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) are working on legislation that would delay implementation of the interchange provisions. The interchange provisions, which are scheduled to be made final in April and could become effective in late July, could lower the amount of transaction fees charged to seven cents per card swipe. CUNA has repeatedly suggested that the Fed should work with Congress to delay interchange regulation implementation to allow more time for consideration of how the interchange regulations would impact credit unions, as well as consumers. Also recently, Federal Deposit Insurance Corp. Chairman Sheila Bair said in a letter to the Fed that the planned interchange fee regulations could result in significant income losses for small financial institutions if a planned exemption for institutions with under $10 billion in assets is not effective. Bair noted that many institutions “may be unable to receive the any tangible benefits from the statutory exemption if card networks do not implement a two-tier fee schedule.” She added that failing to execute this planned exemption “could create a bias toward large bank issuers that have lower marginal costs and greater opportunities to substitute income from non-core banking operations or alternative products.” Portions of the interchange provisions that implement network exclusivity and routing restrictions could also increase costs for small issuers and could lead merchants to discriminate against smaller issuers by “explicitly or ambiguously encouraging the use of large bank cards with lower fees” at the point of sale, Bair said.


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