WASHINGTON — NAFCU and CUNA have joined with the Electronic Payments Coalition to run a series of targeted advertisements to combat efforts by merchants to reduce or cap interchange fees on plastic card transactions.
Eddie Ambrose, NAFCU's associate director of legislative affairs, told CU Journal the original plan was to have ads run the week of May 4, at the same time the Senate was considering S. 414, known as the Credit Card Accountability Responsibility and Disclosure Act of 2009. However, in a last-minute curveball the bill was pushed back a week to debate a military procurement bill.
"We've touched base with our membership to get them to call their senators and ask them to oppose any amendments to this bill," he said.
Interchange fees are a "complicated issue" Ambrose acknowledged. But he said the credit union perspective is simple: CUs operate on a narrow margin and interchange fees allow them to compete with larger financial institutions. "A cap possibly would hurt our members who offer credit and debit cards," he asserted. "The fees are fair because merchants are able to increase sales exponentially by being able to accept debit and credit cards. This is not a consumer issue, it is a business-to-business issue between merchants and card issuers. Merchants don't want to have to pay for a service that brings a large amount of revenue for them."
In 2008, Ambrose recalled, NAFCU and other groups fought against efforts to cut interchange fees in the Senate Judiciary Committee as part of an anti-trust case. "This year, the merchants are turning it into a predatory practice and saying it is a consumer issue. They are venue shopping."
NAFCU said it is joining forces with the Electronic Payments Coalition, whose members include credit unions, community banks and payment card networks, in placing print ads in key publications. The trade association said the ads will shine a light on retailers' questionable objectives in seeking price controls on interchange fees.
CSCU President Bob Hackney noted the issue is a big one for CUs given that they received some $3.5 billion in interchange income in 2008, representing about 36% of non-interest income.
"Merchants are trying to suggest that interchange fees are unfair and are driving up the cost of their goods," Hackney said, but adding that in his opinion it is unlikely that any savings merchants accrue as a result of reducing interchange fees are not likely to be passed on to consumers.
