(Note from Bill Prichard, Public Relations Manager: On May 14, CO-OP issued the statement below regarding the Durbin Interchange Amendment. We welcome your comments on this important industry issue. Please leave a comment via the icon at the bottom of the text).
On May 13 the “Durbin Interchange Amendment” (#3989) to S. 3217 (Restoring American Financial Stability Act) was passed by the U.S. Senate. The U.S. House of Representatives had previously passed a similar bill that does not contain an interchange amendment. The bills will go to a House/Senate conference committee to resolve differences. We hope through the conference committee process the interchange amendment can be deleted. We also hope that Rep. Barney Frank makes good on his promise to us at the CUNA Government Affairs Conference that there would not be interchange legislation this year.
Sen. Durbin’s amendment requires the Federal Reserve Board to regulate signature and PIN debit interchange for issuers and payment card networks with more than $10 billion in assets. That means most credit union cards will be unregulated. Normally we would view that as positive. In this case, however, it will likely make credit union-issued cards the most expensive cards for merchants to accept. This opens the door for merchants to exercise other provisions of the amendment to provide selective discounts, set transaction minimums and maximums, and provide discounts for other payment types. At the last minute, language was added to prohibit differentiation of discounts between issuers; however, the entire provision is unclear. Bottom line, the biggest winners will be the large merchants and the biggest losers will be consumers, many of which are your members.
We are further evaluating the amendment to assess its immediate and long-term impact. We cannot fully quantify the financial effect at this point.
At CO-OP, we will continue our efforts to support CUNA, Electronic Payments Coalition, Electronic Funds Transfer Association and other organizations in the opposition to this legislation. There is something you can do also. We encourage you to visit CUNA’s Web site at www.cuna.org and the sites of your state leagues to keep up with the issue and take the grassroots actions they recommend.
Working together, it is our goal to protect your interchange revenue stream and maintain a level playing field for credit unions in the payment card market.