CUNA and NAFCU have signed a letter with two banking associations urging senators to defeat an amendment aimed at reducing interchange fees that the trade groups say would decrease the availability of credit.

The amendment, sponsored by Senate Majority Whip Richard Durbin (D-Ill.), would allow retailers to offer discounts to consumers that use certain types of credit cards, and there would be no restrictions on how the merchants could advertise the discounts.

The trade associations contend that the amendment would "permit merchants to discriminate against payment cards issued by a particular financial institution, including community banks and credit unions."

They also complain that the additional reporting requirements would be burdensome and could result in the publication of pricing information that would be used by potential competitors.

These results, they argue, could drive smaller banks and credit unions out of the credit card business.

The amendment is likely to be offered as part of a bill to overhaul credit card rules that the Senate is considering this week. The House passed a similar measure last month.

In addition to CUNA and NAFCU, the letter was signed by the American Bankers Association and the Independent Community Bankers of America.