Conyers and Durbin Reintroduce Measure to Reduce Interchange Fees
Lobbyists for credit unions are back on the defensive over interchange fees as a result of measures recently reintroduced in Congress.
In the House, Judiciary Committee Chairman John Conyers (D-Mich.) and Rep. Bill Shuster (R-Pa.) introduced a measure allowing merchants to negotiate interchange with card issuers. It is similar to a bill passed by Conyers' committee last year but never considered by the full House. The bill specifically exempts federally chartered credit unions and all financial institutions that have less than $1 billion in assets.
Its sponsors say it would level the playing field.
"It is not an attempt at regulating the industry and does not mandate any particular outcome. This bill simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees," Conyers said in a statement.
In the other chamber, Sen. Richard Durbin (D-Ill.) has introduced a similar bill, though under his measure, if an agreement between a card issuer and merchant cannot be reached, both sides would have to submit their final offers to binding arbitration.
Credit unions and banks fought off an effort by Durbin to include the measure as part of the bill to overhaul credit card rules that Congress passed and President Obama signed last month.
Conyers has said he hopes to hold hearings on the measure later this year. Durbin, who chairs the committee that controls the funding of the Treasury Department, has said he might try to find a way to deal with the issue in the appropriations process.
Both CUNA and NAFCU oppose the measure and contend it is a solution in search of a problem and would hurt credit unions by cutting their fee income at a time when many of them are already hurting.
"Many credit unions already barely break even on their credit cards, and this would make it worse," said NAFCU Associate Director of Legislative Affairs Eddie Ambrose. "It would definitely make it harder for smaller credit unions."
Retailers contend the change is needed to enable them to lower prices.
"This bill is the next step in the credit card reform process," National Retail Federation Senior Vice President Mallory Duncan said. "Congress can't claim to have fixed credit cards without addressing the billions of dollars in artificially inflated prices that result from credit card interchange fees."