Mica Urges ‘No’ on Interchange Bill

July 15, 2008

FOR IMMEDIATE RELEASE
Contact: Patrick Keefe -- (202) 508-6765
pkeefe@cuna.com

Urging the House Judiciary Committee to oppose a bill that would “negatively affect the interchange credit unions rely upon to support their debit card and credit card programs,” CUNA President and CEO Dan Mica wrote each member, pointing out the measure would “disrupt the competitive balance among merchants, the payment networks and card-issuing credit unions.”

The House Judiciary Committee has scheduled a markup on HR 5546, the “Credit Card Fair Fee Act” for tomorrow (Wednesday, July 16). The bill, if enacted, would establish a three-member board appointed by the Federal Trade Commission and Justice Department to regulate interchange rates. The board would consider “the appropriate weight to be given to any evidence submitted by a party regarding the rates and terms for access to comparable electronic payment systems, including rates and terms set forth in voluntarily negotiated access license agreements.” The bill provides that the parties appearing before the tribunal would be the merchant and the payment network.

“Of the approximately 90 million credit union members nationwide, 97% belong to a credit union issuing debit cards and 83% belong to a credit union issuing credit cards,” Mica wrote. “Credit unions are proud to issue debit cards and credit cards to their members. Credit unions can offer these products because of interchange, the transaction fee that flows from the merchant, through its bank, to the credit union that issued the card to the consumer. Interchange helps the credit union cover its expenses and losses. Merchants benefit as they are guaranteed payment at the time the transaction is completed.”

The full text of Mica’s letter to Committee members follows:

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July 15, 2008

Members, House Judiciary Committee
U.S. House of Representatives
Washington, DC 20515-4902

Dear Congressman,

On behalf of the Credit Union National Association (CUNA), I am writing regarding tomorrow’s scheduled House Judiciary Committee mark up of H.R. 5546, the “Credit Card Fair Fee Act.” CUNA is the nation’s largest credit union advocacy organization, representing 90% of our nation’s 8,300 state and federal credit unions, their state credit union leagues, and their more than 90 million members.

We strongly urge you to oppose H.R. 5546, a bill that would negatively affect the interchange credit unions rely upon to support their debit card and credit card programs.

Of the approximately 90 million credit union members nationwide, 97% belong to a credit union issuing debit cards and 83% belong to a credit union issuing credit cards. Credit unions are proud to issue debit cards and credit cards to their members. Credit unions can offer these products because of interchange, the transaction fee that flows from the merchant, through its bank, to the credit union that issued the card to the consumer. Interchange helps the credit union cover its expenses and losses. Merchants benefit as they are guaranteed payment at the time the transaction is completed.

But merchants want more. Despite benefiting from cards issued by credit unions, merchants are urging Congress to support H.R. 5546, a bill to give them an anti-trust exemption to force interchange lower despite the credit union’s costs to run the system and to establish a new government bureaucracy to set interchange after a lengthy and costly trial-type proceeding. Under H.R. 5546, merchants win and consumers lose. Consumers will lose as credit unions reassess their ability to offer convenient debit cards and competitive credit cards as interchange is reduced under the provisions of H.R. 5546. In addition, any reduction in interchange is not passed through to the consumer. Only the merchants win under H.R. 5546.

We ask for your vote against H.R. 5546, the interchange bill that would disrupt the competitive balance among merchants, the payment networks, and card-issuing credit unions. We consider this a critical vote for our members, and thank you for considering the credit union perspective.

Sincerely,

Daniel A. Mica
President & CEO
Credit Union National Assn.
Washington, DC

Copyright © 2008 - Credit Union National Association, Inc.