WASHINGTON – CUNA lobbyists were negotiating yesterday with congressional leaders on provisions they hope will minimize the impact of interchange amendments add to the bank reform bill that passed the Senate last week.
CUNA hopes to get language into the final bill that will allow credit unions and community banks to continue charging the same fees for cards interchange even if the Federal Reserve directs large banks to reduce their fees. The language would allow Visa and MasterCard to operate a two-tiered fee system, according to Ryan Donovan, senior lobbyist for CUNA.
The bill pass by the Senate, which must now be reconciled with a House version, would do several things on interchange. It would require the Federal Reserve to scale back interchange fees it deems improper or excessive. Credit unions and community banks convinced the Senate to exempt all institutions under $10 billion from this provision. The only problem is, if large banks are directed to lower the fees, it will make their cards more attractive to consumers. CUNA’s Donovan said they are lobbying congressional leaders to strengthen language in the bill that would bar practices that would favor large card issuers. “Nothing in there (the bill) prohibits the payment networks from operating two-tiered systems,” he said.
The other interchange provisions of the bill will allow retailers to offer discounts to shoppers who pay in cash; and also allow retailers to suggest cheaper cards. Visa and MasterCard bylaws currently bar such practices.
The strong majority vote the interchange provisions received in the Senate, 64 votes, indicates it will be hard for credit unions to convince lawmakers to strip the provision from the final bill, even if the interchange provisions were never voted in the House. “It’s going to be a brutal uphill fight to get this thing overturned, given the support for it in the Senate,” said John Magill, chief lobbyist for CUNA.
Still, NAFCU said it is working with House leaders in hopes of getting the interchange language eliminated. “Our number one goal is to try and knock the interchange language out, as we head into the conference,” said Brad Thaler, senior lobbyist for NAFCU.
