Senate Panel Kills Interchange Provision in Spending Bill
Credit unions won a victory Thursday night when a Senate committee approved an amendment to remove a provision that would limit credit card interchange rates on government transactions.
As a result, a key spending bill won't include the provision mandating that interchange fees on credit card transactions for purchases from the government be no higher than the lowest current market rate.
The Senate Appropriations Committee approved an amendment by Sen. Susan Collins (R-Maine) that struck the provision inserted by Sen. Majority Whip Richard Durbin (D-Ill.) to limit interchange fees.
Collins' amendment, which was backed by CUNA and NAFCU, mandated that the Government Accountability Office conduct a study to determine whether it is feasible for the government to impose convenience fees on credit card transactions. Collins said the amendment would benefit banks and credit unions by requiring a study to determine the impact of such a policy change.
Durbin said he would continue fighting for further regulation of interchange fees because it is a matter of fairness. "When it comes to this subsidy for banks and credit card companies, the sky's the limit," he said.
Durbin also rejected suggestions that reducing interchange fees would hurt small banks and credit unions and noted that 80% of the credit cards are issued by the country's 10 largest banks.
Collins' amendment was added to the Financial Services and General Government Appropriations Act.
CUNA President/CEO Bill Cheney wrote the committee that the provisions backed by Durbin would "further erode interchange revenue, further harming credit union members."
NAFCU President/CEO Fred Becker wrote lawmakers that "with the number of new compliance burdens credit unions will be faced with under the recently enacted legislation and regulations, it will be extremely difficult for them to bear this additional pressure on their income."