ST. PETERSBURG, Fla.–PSCU/Co-op Solutions is calling on its member credit unions to make their “collective voice heard” on a variety of card and interchange-related legislation and proposals in Washington.
In a letter to those credit unions, the company’s president, Chuck Fagan noted Rep. Blaine Luetkemeyer (R-MO) introduced the Secure Payments Act (H.R. 7531), which would potentially stop the Federal Reserve's finalization of its proposed debit interchange rule, a so-called “stop and study” bill as CUToday.info reported here.
“While Reg II is directed at debit issuers with assets over $10 billion, the downstream impact affects everyone,” Fagan wrote. “The Federal Reserve seeks to revise and reduce the debit interchange rate cap implemented with the 2010 Dodd Frank/Durbin Amendment and codify an ongoing rate adjustment every two years. Automatically adjusting the cap bi-annually does not provide for analysis or comment on adjustments and the compressed timeframe, as proposed, results in three adjustments in a narrow window.”
With the comment period on Reg II running through May 12, Fagan urged CUs to offer their input to the Fed.
The CFPB & Late Fees
Meanwhile, Fagan also pointed to last week’s final rule from the CFPB that would adapt a late fee safe harbor threshold of $8 for issuers that with their affiliates have one million or more open credit card accounts.
“While Navy Federal is the only credit union directly impacted, PSCU/Co-op Solutions is disappointed with the CFPB’s action this week to regulate the maximum cap on credit card late fees, as intervention into the very competitive payments marketplace is unnecessary,” Fagan said. “We know that the value credit unions deliver to members is overwhelmingly superior to large banks and government regulation is unwarranted.”
Fagan said the attempt to “carve out” impact to card issuers with portfolios fewer than one-million accounts will lead to “market confusion – and put pressure on card issuers below the threshold to potentially make market adjustments to programs as well.”
“As credit unions advocate for financial health for all, the new rule to limit credit card late fees to $8 ironically lowers the barrier to consumer delinquency, resulting in higher debt, lower credit scores and reduced credit access,” he added.
Credit Card Interchange
As CUToday.info has been reporting, Fagan reminded credit unions that Sens.Josh Hawley (R-MO) and Jack Reed (D-RI) have joined Sens. Peter Welch (D-VT) and J.D. Vance (R-OH) in support of the Credit Card Competition Act (CCCA) proposed by Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) that would upend credit card interchange for card issuers.
“The CCCA targets issuers with assets over $100 billion to enable at least two credit card networks to be used on their credit cards instead of just one, and at least one of those networks must be a network other than Visa/Mastercard,” Fagan wrote. “While the legislation has not yet been reintroduced for voting this session, we are supporting all lobbying efforts to counter adding language to active bills.
Benefit to Large Retailers
“Known as the ‘Big Box Bill,’ the CCCA would benefit large retailers at the expense of consumers, small businesses and the majority of U.S. financial institutions,” Fagan continued. “Additionally, the legislation would eliminate funding for credit card rewards programs, weaken cybersecurity protections and increase fraud. As we have previously communicated, we do not see this as a win for credit unions or consumers.”
Field Hearing Scheduled
Fagan pointed to a March 20 field hearing to be held by CFPB and Department of Transportation that will discuss airline rewards. He further noted Durbin has requested a public hearing on April 9 with the CEOs of Visa, Mastercard, American Airlines and United Airlines regarding competition in the credit card market.