WASHINGTON—Proposed government price caps on interchange will leave consumers more vulnerable and create less access to services, America’s Credit Unions Chief Advocacy Officer Carrie Hunt told a meeting here on the digital payments economy.
Hunt’s remarks were made to the “The Summit: The Digital Payments Economy” event hosted by Punchbowl News in Washington.
Hunt told the group during a panel discussion credit unions are working to expand digital services despite some barriers.
“We have an ecosystem where interchange exists to cover the costs of a transaction, and to make sure things are running efficiently and effectively,” Hunt said. “When the government steps in to try and cap or artificially control those costs, then the market doesn’t work the way it should.”
Two ‘Threats’ Cited
She referred to both the Credit Card Competition Act, which America’s Credit Unions calls the “Big Box Bailout Bill” and the Federal Reserve’s debit interchange proposal as two threats that will affect interchange income and “harm the entire payments system.”
Hunt further told the event that history shows that financial institutions and consumers are negatively affected when interchange income is reduced, and cited estimates that debit interchange income would decrease by one-third if the Fed’s proposal is finalized (see related story in today’s Fresh Today reporting on CUToday.info).
“From the regulated financial institution perspective, where’s the money going to come from if they have to cover costs that aren’t covered by interchange anymore?” Hunt asked. “Unfortunately, it’s going to have to come out of other areas and make things for expensive for the consumers. For credit unions in particular, as not-for-profits, that’s the last thing that we want.”
Congress Urged to Listen to Data
Hunt encouraged members of Congress to listen to the data their credit union constituents are bringing them, which show that both debit and interchange caps benefit the biggest merchants at the expense of consumers, small businesses, and community financial institutions, ACU said.
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