Bid Would Strike New Interchange Amendment From Government Spending Bill
WASHINGTON – In a last-minute effort to save credit unions and banks from further deterioration of their cards interchange fees, one senator will propose an amendment during today’s vote on a government spending bill that would require the federal government pay the lowest interchange fees on its card transactions.
The proposal by Maine Republican Susan Collins would strike the interchange amendment and instead direct the Government Accountability Office to conduct a study on the feasibility of allowing the federal government to impose convenience fees for the use of credit cards for the purchase of goods and services.
The latest interchange amendment was inserted in the government spending bill on Tuesday by Sen. Richard Durbin of Illinois, the sponsor of the amendment in the Dodd-Frank Financial Reform Bill setting up the Federal Reserve as a potential arbiter of interchange on debit card transactions. The latest amendment, to be voted today by the Senate Appropriations Committee, would require the payment cards networks to charge the federal government the lowest existing interchange rate for transactions such as paying taxes, buying passports and other services. The lower rate charged for government transactions could eventually be used as a benchmark for the Fed’s determination on debit card rates.
The credit unions and banks, which lost their fight to defeat the earlier Durbin amendment, were gearing up the last two days to fight the latest proposal.
The stakes are enormous as credit card companies, mostly Visa and MasterCard, processed an estimated $62 billion in interchange fees that went to credit unions and banks last year, about 10%, or $6 billion of it, to credit unions.