This afternoon I will be meeting with Congressman Mo Brooks and other credit union CEO’s in the area to discuss the interchange fee issue from the credit union perspective. Credit union members will be negatively impacted down the line if interchange fee rates are drastically reduced. Retailers may want to pay less for accepting debit and credit cards, but they give no guarantees and the law provides no guarantees that consumers will reap any of the benefits of lower interchange fees from the retailers. Those savings will go straight to the retailer’s bottom line and they will be under no obligation to lower retail prices for the goods and services they sell.
If the credit union receives less income on our debit card program due to a reduction in interchange rates, that lost income will either have to be created somewhere else or current services will have to be altered or terminated. Either way, our members would see a distinct difference in some fashion. I doubt that our members would see any difference in the prices that they pay with their local retailer.
The last thing that consumers need right now is less money in their own pockets. The economic impact of the changes to interchange rates has not been evaluated and studied. Our fragile economy does not need laws that could curtail consumer spending. The credit union industry is simply asking Congress to delay implementation of the Durbin Act section that deals with setting a price on interchange rates to allow time for a financial impact study. We will be asking Congressman Mo Brooks for his support of HB 1081 to allow such a study. I agree that some reform is probably necessary in the card payment system but the current pricing solution is woefully inadequate since the pricing model did not address all costs associated with providing a card program.
FYI – Previous posts have addressed the interchange rate fee issue in more detail. If any members have questions or comments over the interchange rate issue, feel free to contact me.