WASHINGTON – The credit union and banking lobbies were uniting last night against a provision that would be included in the credit card reform bill to allow merchants to offer discounts for use of debit cards, as opposed to credit cards, at the point of sale.
The allowance is similar to where some merchants, like gas stations, offer discounts for payment by cash because they do not want to pay the card interchange fees. By allowing merchants to offer discounts for debit, it would deprive credit unions and banks of interest charged on credit cards, as well as the higher interchange fees.
CUNA and NAFCU joined the American Bankers Association and Independent Community Bankers Association last night in lobbying the chief sponsors of the provision, Democrat Richard Durbin and Republican Kit Bond, against the measure.
The measure is the latest manifestation of the fight being waged by the merchants and the financial institutions over interchange fees, according to Ryan Donovan, senior lobbyist for CUNA. "It’s another way to get at the whole interchange issue," he told The Credit Union Journal.
In a letter sent to all senators, CUNA, NAFCU, the ABA and ICBA said that if the measure is adopted, the economics of offering card products would change such that "many credit unions and community banks would be likely to leave the business--and consumers and our overall economy would suffer."
