The New York Credit Union Association has long opposed legislation that allows merchants to route payments through unaffiliated networks, and there were some key take-aways to note from the July congressional session regarding the Credit Card Competition Act (CCCA).
In the Senate, Sen. Roger Marshall (R-KS) fought to attach the CCCA Amendment to the National Defense Authorization Act (NDAA). While ultimately it was not attached to the NDAA, the merchant activity on this bill continues to increase and Sen. Marshall has issued statements that the CCCA Amendment will receive a vote when the Senate reconvenes in the Fall.
History and the lessons from the Durbin Amendment show that interchange legislation does not work and will negatively impact all financial institutions, their members and customers. Across the industry, trade groups are aligned and working together to ensure legislators understand the impact of this flawed legislation.
Members of the U.S. Senate introduced the Credit Card Competition Act of 2023 in June. The current system protects cards and competition for consumers and businesses. The interchange fee is a portion of the merchant discount fee that the retailer’s financial institution pays to the cardholder’s credit union for the service of utilizing the card system and the benefits provided, including the avoidance of processing fees and ensuring guaranteed payments. Interchange fees help credit unions protect consumer data and offer additional services like fraud monitoring needed as consumer data and privacy is consistently under attack by cyber criminals.
The Association cannot support any legislation that hands control of the nation’s credit card system to merchants that do not have our members’ privacy and interest in mind, only internal profit.
Your voice is critical
With Congress currently out of session and legislators back in their home districts, August is a critical time for them to hear directly from credit unions regarding the CCCA legislation, such as:
- Interchange is a vital revenue stream that enables you to serve your community and members with safe and secure debit and credit products.
- The planned carve out for financial institutions less than $100 billion in assets will not be effective as thousands of smaller financial institutions rely on agent banks to issue credit cards.
- Security will suffer and fraud will increase driven by the addition of other networks that have never processed credit transactions.
- Your operating costs will increase, and innovation will suffer as the entire payments industry will be tied down implementing the new requirement and re-issuing millions of cards during the timeframe needed to comply with this mandate.
- Similar to the original Durbin Amendment, small businesses will see higher operating costs and savings will not be passed down to consumers, while large retailers benefit.
- This bill leaves you at a disadvantage to cards issued on three-party networks, which are specifically excluded from this legislation.
Questions related to Association advocacy initiatives can be directed to the Association’s director of governmental affairs, Michael Colello, at firstname.lastname@example.org or (800) 342-9835 ext. 8207.