Credit Card Interchange Next On Congressional Agenda

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WASHINGTON – The chief Senate sponsor of the bank bill amendment that would create federal oversight of debit card interchange is expected to continue his campaign to open the market for credit card interchange to greater competition.

“This amendment addresses a piece of the problem,” a spokesman for Sen. Richard Durbin, the Illinois Democrat who sponsored the provision that would allow the Federal Reserve to order a roll back in interchange on debit card transactions for the largest financial institutions, those over $10 billion in assets.

Credit union executives who lobbied Capitol Hill against the interchange amendment last week expressed concern that the current provision targeting debit interchange will be expanded to include credit cards – which amounts to about two-thirds of the $5 billion a year in interchange earned by credit unions a year.

Sen. Durbin can be expected to continue his push for legislation he introduced in each of the last two congresses that would allow large retailers to negotiate lower fees with banks for credit card transactions, the spokesman told Credit Union Journal yesterday. “Debit is the fastest growing section of interchange,” he noted, explaining the Senator’s reason for focusing on debit transactions in the recent legislation.

Durbin, the Senate’s second-most-powerful Democrat as Majority Whip, has been the target of credit union antipathy for several years now, as an opponent of the credit union-backed bankruptcy reform bill; as a major advocate of cramdown legislation; and as one of the leading advocates for opening the market for card interchange – currently dominated by Visa and MasterCard – to competition.

Durbin was in negotiations with CUNA on a way to minimize the impact of the interchange amendment until the last minutes leading up to the Senate’s overwhelming vote to add the provision to the bill, but the talks broke down, according to his spokesman. As a result, Durbin included an exemption carving out all credit unions and banks under $10 billion from the main portion of the amendment. The Senator, said the spokesman, is still open to negotiations to address “reasonable concerns” over the amendment.

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