Mellin outlines interchange bill concerns in letter to Sen. Schumer

Expressing his hope to collaborate on how to best meet the financial needs of New Yorkers, William J. Mellin, president/CEO of the New York Credit Union Association, on Friday wrote to Sen. Chuck Schumer to express the Association’s concerns regarding S.4674, the Credit Card Competition Act of 2022. The act which would impose price caps on the amount merchants can be charged when choosing to utilize credit card networks to build their businesses.

“Every day, New Yorkers depend on safe, reliable credit transactions to empower their lives,” Mellin stated in the letter. “As not-for-profit cooperatives with a statutory obligation to better our members’ financial well-being, credit unions appreciate efforts to maximize affordability. However, previous interchange alterations hurt many vulnerable consumers.”

Additional changes to the card network system would introduce insecurity with no guarantee of consumer or small business benefit, and even with exemptions for small institutions, credit unions can still be harmed as a member of an interconnected financial ecosystem, Mellin said.

Specifically, the letter stated that:

  • interchange savings are not passed on to the consumer, and previous changes to the system have not benefitted the consumer or small businesses, but rather help retail giants who are under no statutory obligation to pass savings on to consumers;
  • the legislation would incentivize profit-maximizing merchants to unilaterally choose the cheapest networks even if they lack security technology and protocols effectively exchanging consumer data security for retailer profits; and
  • the legislation would place undue financial burden on financial institutions due to increased insecurity creating additional costs to the financial institutions and ultimately, the consumer.

“In searching for potential consumer savings, this legislation unilaterally empowers retailers to maximize profits without implementing guardrails for stakeholders,” Mellin stated. “As an unintended consequence, consumers will have less access to safe, affordable financial products.

The Association holds that merchant profits should not come at the expense of the financial health and security of New Yorkers.

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