S 3217 Durbin Interchange Amendment

Received an email from my credit union this morning with the following information:

I am writing to you about an issue that could negatively impact all members of Tech CU, as well as all credit unions across the country. Last week, the U.S. Senate passed S. 3217, the Restoring Financial Stability Act to re-regulate the financial industry. Included in this legislation at the last minute was the “Durbin Interchange Amendment” which expands the scope of the bill to the debit card system in a very harmful way.

The Durbin Amendment, which was sponsored by big box retailers and pushed by their lobbyists, seeks to cap the amount of interchange fees paid by retailers for debit card transactions. The use of debit cards over the electronic interchanges has benefited consumers who do not wish to carry cash, write checks or use credit cards. The benefit to the retailer is that each time a debit card is used, the merchant is paid immediately and is protected from check fraud and counterfeiting. In return, the credit union receives what is described as an “interchange” fee through the card payment processing system. This fee represents the merchants’ fair share of the costs of this convenient and beneficial payment system. Interchange income allows our credit union to continue to offer low or no-cost products and services. It also allows us to absorb the rising cost of fraudulent transactions when exposed merchant data systems are breached by data thieves.

The new amendment would reduce the amount of interchange fees paid by merchants while eliminating none of the benefits to merchants. This could result in Tech CU having to charge more fees, increase interest rates on loans, or at worst, suspend some products and services in order to cover costs related to the interchange system for which merchants would no longer be paying.
Retailers claim that interchange fees add to consumers’ costs because they are forced to include interchange fees in the price. They argue that if these fees are reduced, the savings will be passed on to the consumers. But in a recent Congressional hearing, a retail trade representative stated that his industry would object to any language in the bill that would ensure that savings be passed directly to the consumer. With his statement, he makes it clear there is no guarantee that consumers would pay less if interchange fees were reduced.

Another feature of the amendment gives merchants the ability to discriminate against whichever debit cards they choose not to accept. That means that merchants can interfere with consumer choice by arbitrarily varying the terms of debit card acceptance, so your card may be rejected, regardless of where you keep your money.

The current interchange system allows Tech CU to provide competitive and member-friendly debit card services to you. Please join me in urging your Senators and Representatives to take the Interchange Amendment out of S. 3217. A pre-written letter is available at Connect for the Cause, a tool created by the California/Nevada Credit Union League to help us easily connect with elected officials about issues affecting credit union members. Visit Connect for the Cause at www.connectforthecause.org and find “Oppose Interchange in S. 3217” in the center of the page. Click the “Take Action” link to send a form letter or your modified version to your legislators.
Thank you for your support of our credit union and our continuing efforts to serve our membership.

I believe this Amendment is important on many levels. One of those levels is that we help pay for our candidates (many people) by debit cards. Just putting this out there for people to look at.