WASHINGTON—Credit unions’ investment in payment technologies and the role of interchange in fraud prevention were subject this week of a letter to the Senate Banking Committee (SBC) by America’s Credit Unions.
“Credit unions invest significantly in both security and compliance management systems to prevent unauthorized electronic fund transfers (EFTs) and support faster, innovative payment options for their members,” wrote America’s Credit Unions President/CEO Jim Nussle. “The credit union industry’s commitment to relationship banking also gives members confidence that if they have a problem, they can count on their credit union to make every effort to resolve the issue.”
Nussle told the Senate credit unions are increasingly investing in peer-to-peer (P2P) payment options for their members.
However, he urged the SBC to not make credit unions liable for the “misdeeds of fraudulent actors” because it would limit consumer choice by straining credit union resources.
‘Negatives’ of Bill are Cited
Additionally, he again stressed what America’s CUs believes are the negative impacts the Credit Card Competition Act (S.1838/H.R. 3881).
“This bill would require financial institutions to allow credit card transactions to be routed via an alternative network,” Nussle noted. “Additionally, the bill contains an explicit requirement that card issuers enable all types of transactions and security protocols, even if a credit union finds that these methods are unnecessary, unaffordable, or unsecure.”
Covering the Cost of Fraud
He argued that credit unions help to cover costs when a consumer incurs fraud, but emphasized “[a]ny reduction in interchange fees would directly affect credit union investment in fraud management systems and processes that are dedicated to reducing fraud risk in the system—forcing credit unions to increase costs to cover these necessary expenses.”
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