CUs Balk At 11th-Hour Compromise On Interchange Fees
WASHINGTON – The credit union lobby this afternoon rejected a proposed deal on the controversial interchange fee amendment to the bank bill, just as congressional leaders are preparing to meet tomorrow to hammer out final language on the provision.
The compromise would limit the definition of the interchange subject to Federal Reserve review to debit card fees that are established by a payment card network (Visa and MasterCard) and that accrue to either the card-issuing bank or to the network itself. The compromise provides that the Fed cannot regulate network fees (that Visa and MasterCard charge and that accrue to themselves) except to ensure that the fees are not used to circumvent interchange fee regulation.
The compromise would also exempt all cards issued for government benefit programs from the Fed’s price controls.
“We are greatly disappointed with this interchange proposal as it falls far short of safeguarding consumers’ best interests,” said NAFCU President Fred Becker. “There is no language guaranteeing that any savings merchants realize will be passed on to consumers”
“Moreover, the carve-outs made for government-run programs underscore our concerns about the harmful impact of this legislation to all card users,” said Becker. “In its current form, this legislation would still put credit unions at a severe disadvantage compared to large credit card issuers.”
The interchange provision is one of several scheduled to be debated tomorrow at the conference of House and Senate leaders working to reconcile separate versions of the bank reform bill.