April 22, 2011 – A letter to the editor penned by a NAFCU-member CEO and published in a Gary, Ind., newspaper yesterday points out that an April 12 editorial on the debit interchange provision contained “fundamental contradictions.”
Scott Arney, CEO of Chicago Patrolmen’s FCU (Chicago), noted in the Post-Tribune, a publication of the Chicago Times, that the debit interchange rule set to go into effect July 21 will net the largest 2 percent of merchants more than $12 billion in additional income. That extra cash does not mean consumers will face lower retail prices, as the editorial, “Don’t delay swipe-card fee reform,” suggests. There is no provision requiring retailers to “pass that windfall on to their customers,” he wrote.
Arney also said that the April 12 editorial “ignores common sense” about the exemption that would allow smaller institutions to charge higher fees. He said his own credit union “would be forced, like everyone else, to match the rates of large financial institutions” because merchants will ultimately discriminate against his credit union’s debit cards. Furthermore, his credit union will have to “increase revenue from other sources, and/or start charging fees for services we currently provide free of charge.”
He added that a delay in the rule would not be needed if Congress had taken the time to examine the impact of the price caps on customers and small financial institutions.
Under the Dodd-Frank Act, the Federal Reserve was originally slated to have a final rule out on debit interchange fees yesterday. It told lawmakers it would not meet that deadline but that it would have the final version completed in time for the statutory implementation deadline of July 21.
There are fewer than 50 legislative days between now and the July 21 deadline, and NAFCU is continuing to galvanize support of S. 575, a bill proposed by Sen. Jon Tester, D-Mont., that would set a two-year delay of the rule and require a study of its impacts. The association also backs H.R. 1081, a one-year delay proposed by Rep. Shelley Moore Capito, R-W.Va.
During the current recess, NAFCU is urging credit unions to meet in person with their U.S. representatives and senators to press for support and cosponsorship of the debit interchange rule delay. Credit unions and their members can also send letters online via SaveYourDebitCard.com, or call lawmakers’ offices in their district or main offices. For their Washington offices, dial 202-224-3121.