March 2, 2010 - NAFCU launched a targeted grassroots effort Monday to combat possible interchange legislation by Sen. Arlen Specter, D-Pa., that could reduce interchange fees and force smaller institutions such as credit unions out of the credit card market.
NAFCU alerted members in Pennsylvania that retailers have been pushing the senator to introduce a bill. It urged that credit unions also make their views known to him.
"Merchants' efforts to cap interchange fees as a pro-consumer move is a veiled attempt to promote their own self-interest," said NAFCU Director of Political Affairs Jennifer Wahlen. "We must ensure that legislators hear the truth from credit unions on the true impact of interchange legislation."
The Government Accountability Office, in a report last November, found that it would be difficult to identify cost savings through cuts in interchange fees. Says Wahlen, "Interchange fees are necessary to cover the costs of a number of functions related to credit card accounts, including card replacements in the case of retailer data breaches or identity theft, which continue to rise."
The report also noted the fees generate revenue for credit unions and community banks that allows them to compete with larger issuers. NAFCU has urged Congress to reject efforts to set an arbitrary cap on such fees since that could force credit unions to curtail or cease offering credit card programs.