CU Trades Argue Interchange Bill a Threat to Credit Access
Eight financial services trade groups send a letter to House leaders warning of the bill’s potential impact.
Credit union trade organizations CUNA and NAFCU, along with six other groups, delivered a letter to U.S. House of Representatives leaders to raise their dire concerns over a bill that could reduce access to credit and credit card use for consumers.
The letter, sent Tuesday to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.) from the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, CUNA, Electronic Payments Coalition, Independent Community Bankers of America and NAFCU, pushed back on a companion bill to the Credit Card Competition Act of 2022 that the organizations claimed could have damaging impacts on consumers.
The Gooden-Welch Bill, introduced by Reps. Peter Welch (D-Vt.) and Lance Gooden (R-Texas), aims to “bring needed competition and choice to the Visa-Mastercard dominated credit card network market.”
CUNA, NAFCU and others argued the bill has its priorities wrong.
“Quite simply, credit cards make life work. Consumers have come to rely on their credit card of choice to pay for gas, groceries and unexpected emergencies. This is especially true as consumers leverage their credit card rewards to deal with rising costs,” the letter stated.
It continued, “It’s disappointing that the Gooden-Welch bill prioritizes big box retailers’ profits over consumers at a time when consumers can least afford it. The Gooden-Welch bill would allow merchants to choose the cheapest routing networks – which may not offer the same robust security as trusted, established payment networks. This creates additional risks for financial services providers that are extending credit to consumers for everyday purchases, big and small.
“That’s an important distinction that retailers are trying to overlook; financial institutions cover the costs for replacement cards and fraudulent purchases, making them more sensitive to changes in the payments system than merchants.
“We are particularly concerned that changes to the current routing system would disproportionately harm credit unions and community banks that serve underbanked areas. We’ve witnessed how the 2010 Durbin Amendment, which was adopted as part of the Dodd-Frank Act, capped debit card fees, leading to a decrease in free checking accounts and low-cost banking services for consumers. We are determined not to repeat the past – and, as such, we oppose the Gooden-Welch bill.”