WASHINGTON—CUNA, NAFCU and the Defense CU Council have joined with other financial services organizations in a letter to the House expressing opposition to the interchange bill (H.R. 3881) introduced last week by Reps. Lance Gooden (R-TX) and Zoe Lofgren (C-CA), arguing that among other things it would render current cards inoperable.
The letter follows a similar one recently sent by the organizations to Senate leaders.
“Far from increasing competition in the credit card marketplace, this legislation will hurt consumers and benefit big box retailers by reducing the number of credit card issuers competing for consumers’ business, removing a consumer’s choice of preferred card network, wringing out the competitive differences among card products, limiting popular credit card rewards programs, and putting the nation’s private-sector payments system under the micromanagement of the Federal Reserve Board,” the letter reads.
“The Gooden-Lofgren bill accomplishes this by using legislation to circumvent the free market to award private-sector contracts to a small handful of the sponsors’ favored payment networks to pad the profits of the largest e-commerce and multi-national retailers who are raising prices on American families far more than the real rate of inflation,” it adds.
Other Points Raised
The letter also states:
- “Interchange is the cost retailers pay to their financial institution or card processor in return for many benefits that come with card acceptance, including higher sales, a larger customer base, reduced cash-handling risks, reduced bounced checks, and guaranteed payment.”
- “The dual routing technology in the bill does not exist today because of the nature of a credit transaction as an extension of unsecured credit to consumers. Credit cards are very different than debit cards and should not be regulated as such.”
- “The legislation would hand control of the nation’s credit card system to breach-prone merchants. More than 400 million individuals were affected by data breaches in 2022, due in part to retailer negligence.”
- “The bill’s mandates render existing cards inoperable.”
- “Both federal statistics and courts agree there is sufficient competitiveness in the current credit card marketplace.”
- “The bill is anti-free market, as it guarantees profits to favored card networks.”
- “The bill is an overreach that would put the government into consumers’ pockets that hold credit cards, forcing them to give up their preferred card network.”
- “The Durbin Amendment harmed credit unions and community banks and this would repeat those consequences.”
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