BISMARCK, N.D. (2/5/15)--The Credit Union Association of the Dakotas is calling on member credit unions to contact legislators to oppose a debit card bill. The legislation would reduce the time allowed to release a debit card hold when the transaction was satisfied by another payment type.
|Chad Bartoch, director of technology at $88 million-asset Railway CU, Mandan, N.D., testifies before the House Industry, Business and Labor Committee in North Dakota. Also testifying on behalf of the Credit Union Association of the Dakotas were: Jeff Olson, CUAD executive vice president of of government affairs, and Heather Fleck, Railway CU assistant vice president operations. (Credit Union Association of the Dakotas Photo)|
CUAD representatives appeared before the state House Industry Business and Labor (IBL) Committee Tuesday to voice their opposition to the HB 1460.
Credit union advocates testified that the bill would cause an unnecessary burden on credit unions without any significant off-setting benefit to consumers.
The IBL committee voted 14-0 for a "do not pass" recommendation to the House.
Typically, hotels, car rentals, gas stations and airlines are instances were merchants put extended holds on debit cards. For most credit unions, the time of the hold depends upon how quickly each merchant completes its transactions. If the merchant doesn't complete its authorization within four days, the hold would fall off, and the funds would be available to the member again.
It is CUAD's opinion that the bill would alter or regulate a payment system that performs so efficiently and effectively that more and more merchants no longer accept checks (Memo Feb. 4).
This legislation, however, would task the state to request payment networks, processing centers and debit card issuers to redesign their electronic payment networks.
Credit unions and other issuers believe that the pre-authorization hold is provided to protect both merchant and the member/consumer, CUAD said.
It protects the merchant from an insufficient funds notice, or inconvenience of chasing down and collecting non-paid funds, and it protects the consumer from overdrawing and having to pay overdraft fees. In the instance where a member consumer holds or guarantees a payment with a debit card and chooses to pay with cash or a credit card, it is up to the merchant to clear that hold.