Credit Union National Association lobbyists broke off negotiations congressional leaders last Thursday and are instead firing up the CU grassroots to lobby for provisions they hope will minimize the impact of interchange amendments added to the bank reform bill passed by the Senate last week.
CUNA hopes to remove the interchange amendments from the bill, but failing that, the trade group is seeking language 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. For the small issuer exemption to work, however, Visa and MasterCard would have to be willing to operate a two-tiered fee system–something CUNA is not convinced the two major credit card companies will be willing to do, according to Ryan Donovan, senior lobbyist for CUNA. “Nothing in there [the bill] prohibits the payment networks from operating two-tiered systems,” he said. "But nothing requires them to do so."
The bill passed by the Senate, which now must 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 with less than $10 billion in assets 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 the trade group is lobbying congressional leaders to strengthen language in the bill that would bar practices that would favor large card issuers.
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 difficult 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 No. 1 goal is to try and knock the interchange language out, as we head into the conference,” said Brad Thaler, senior lobbyist for NAFCU.
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