(Note: As a service to employees, the Transporter will publish news and information about ICON Credit Union activities as appropriate. In most cases, the content will be provided by ICON. The credit union was created by and for transportation department employees, and now serves a much broader customer base in Idaho and eastern Oregon. ITD does not necessarily advocate membership in the credit union or endorse calls to action. Employees are in the best position to make those decisions.)
A bill under consideration by Congress will have significant impacts on financial institutions and their customers, according to representatives ICON Credit Union. Credit union officials encourage ICON members to learn about the potential effects of the bill and to contact Congressional delegates with their concerns. The deadline for submitting comments is June 30.
“Federal legislation is threatening the way your credit union manages the credit and debit card programs you enjoy as a credit union member,” ICON advises. “We need your help to send an immediate, strong message to your Congressmen that this legislation is detrimental to your credit union and ultimately you, as a consumer.”
According to information from the credit union the U.S. Senate approved the Financial Regulatory Reform Bill. While the overall bill takes a balanced approach, there is one provision of great concern to credit union members, ICON says.
In the debate process, the bill was amended to direct the Federal Reserve Board to limit fees that merchants pay when customers pay with debit cards. The interchange amendment, which did not receive a thorough review, does not belong in this bill and will have unintended consequences for all consumers. The House also passed a financial reform bill in December, and the two chambers will reconcile the differing bills by a conference committee.
The Senate-passed interchange provision reduces merchants’ financial responsibility for the benefits received from the card payment system. Merchants receive tremendous benefits when they choose to accept debit and credit cards as a form of payment. They are paid immediately, and they do not have to deal with cash or wait for a check to clear. Like electricity or rent, the interchange fee that the merchant pays is a cost of doing business. Government rate controls on interchange reduce the merchants’ responsibility to pay for the benefits received from the card payment system and will drive up costs for credit unions and their members.
Credit unions incur significant expenses in operating card payment systems. For example, they are responsible for administration, customer call centers, and reissuing cards in cases of merchant fraud. Interchange supports these costs. If interchange fees were reduced, credit unions and other small financial institutions would be forced to raise rates and fees for card services; some may even be forced to discontinue card services to members. Furthermore, there is no evidence to suggest that merchants would pass along any savings resulting from lower interchange to consumers.
The interchange provision of the Senate bill offers no real “exemption” or “carve-out” for credit unions; if it were included, merchants and big banks would set rates that would make it impossible for Credit Unions to compete. In the end, merchants could refuse to accept the credit union debit card you rely on for everyday use.
ICON encourages members to send a message to Congressional delegates urging them to oppose inclusion of the Senate-passed interchange provision in the financial reform bill. A prewritten letter is available at the Credit Union Grassroots Action Center, http://capwiz.com/cuna/home/ , where members can personalize and send an e-mail or print and fax a letter.