FORT LAUDERDALE, Fla. — A key lobbyist with Visa USA thankedcredit union executives for CU help in defending card interchangeand suggested that the interchange fight may be mostly over forthis year.
Since last year, a coalition of merchants has been lobbyingCongress for legislation that would cut or cap credit and debitcard interchange and a coalition of card brands, processors andissuers have been lobbying Congress to oppose the effort. CSCU CEORobert Hackney has attributed card interchange as being 32% oftotal noninterest fee income for card issuing credit unions.
Speaking to credit union card executives attending Card Servicesfor Credit Unions 20th anniversary annual meeting, Dan McDermott,head of U.S. government relations for Visa, praised credit unionsfor their help fighting to keep card interchange from being cut orcapped.
“Together with credit unions we have managed to do some key work ineducating law makers about the interchange issue and the impact itreally has on small card issuers,” he told the executives.
McDermott put the interchange issue in the context of both thechanged political atmosphere and dynamics in Washington this yearand the overall effort to reform the credit card practices orprimarily large bank card issuers and described the merchant effortto find a winning message on the issue.
“You might have seen some of the merchant ads from last year,”McDermott said, describing the ad of the Merchant PaymentsCoalition produced and purchased on the issue.
“In one you might recall a small child is pictured playing a roleas a pirate while a voice over claims that card executives wantedto be pirates as little children and grew up to become pirates inthe card industry with allegedly unfair fees, et cetera,” McDermottsaid. “What they were playing on was the lack of information andunderstanding among lawmakers about the interchange issue.”
The MPC also chose last year not to try to advance the legislationthrough the House and Senate Committees which oversee card issuers,opting instead to try to work through judiciary committees, usingan argument that card interchange is an anti-trust issue.
The Electronic Payments Coalition, the group of card issuers,processors and brands which formed to fight the merchant effort,blocked that legislative attempt, McDermott explained, by musteringcredit unions and other smaller card issuers like community banksto explain the interchange issue to lawmakers.
McDermott said the impact of the EPC's effort came through when themerchant's interchange bill was marked up in the House JudiciaryCommittee last year. Even though it had been introduced andchampioned by Committee Chairman Rep. John Conyers (D-Mich.), thebill only narrowly made it through the committee.
“The bill mark up had been scheduled for 30 minutes,” McDermottsaid, “and it ended up taking seven hours.”
Since then McDermott explained that the merchants had shifted theireffort to try to attack the interchange issue by riding on back ofthe card reform effort but added that, at least so far, that hadnot worked either.
“We are still watching closely to make sure nothing is added oninterchange to the card reform bills on the floors of eitherchamber,” McDermott said, “but so far we have not seenanything.”
McDermott also reported that a previous merchant effort to targeteight freshman Democratic House members with specific advertisingin their districts had also failed and wound up bringing a backlashon the merchants.
“In the political world, one of your most vulnerable times is whenyou are a freshman member of the House of Representatives,”McDermott said. “Running this ad campaign when the measure theywanted the members to support was not even supported by committeechairman felt a lot like unwarranted pressure to the Democraticleadership.”
He also suggested that once the credit card reform measured passedCongress, legislators would be unlikely to visit cards again thisyear.
“[The card reform measures] are about as detailed as Congress islikely to go with cards this year,” McDermott said. “I don't seethe issue coming up again for a while.”
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