Below is the text copy of a Letter to the Editor sent to the Huntsville Times on this date.
The Senate recently added an amendment to regulatory reform that will establish government price controls that will reduce a merchants’ financial responsibility for the payment network they benefit from every day. It’s called interchange; which are what merchants pay to credit unions like ours and other financial institutions for processing a debit card transaction
If passed, this amendment will have a negative impact for our credit union members, as well as millions of consumers in Alabama. The Senate did not hold any public hearings on this interchange provision or conduct any studies before voting, yet it passed anyway. That was a mistake that needs to be rectified before Congress completes its work on this bill this month.
At North Alabama Educator’s Credit Union, the legislation will mean that interchange will cover only a small part of the cost of providing debit card services. Interchange covers the costs associated with credit and debit cards — things like fraud, and identity theft. All of these risks are assumed by us so that merchants can accept debit cards. Not to mention the merchants get paid for the transaction very quickly, sometimes even the same day.
Interchange fees are part of the cost of doing business, much like postage and advertising and they certainly are less costly than returned check charges. While it is true the merchants are paying more in interchange, it is not due to raised fees, but more people are using their cards for everyday purchases. Someone has to pay for these fees, but it should not be the consumer. They like using their credit and debit cards, and it is a service we want to be able to continue to offer.
There is still time for members of Congress to strip out these harmful interchange provisions, which really have no relation to the regulatory or Wall Street reforms the bill is intended to address. Economic times are tough enough these days. Consumers should not have to incur higher costs or accept fewer financial services if this ill-conceived debit interchange proposal were to become law. Please let your lawmaker know you don’t agree with the interchange amendment associated with the regulatory reform bill.
Greg Olmsted, Manager/President
North Alabama Educators Credit Union