instand issuance

Interchange bill means fewer options, increased data security threats

August 8, 2022

CUNA, all Leagues, the American Bankers Association, and all state banking associations wrote to Congressional leadership outlining strong opposition to the interchange bill introduced earlier this month by Sens. Roger Marshall, R-Kan., and Dick Durbin, D-Ill. CUNA previously wrote to the legislators with concerns and issued an action alert last week resulting in more than 7,000 messages sent to Congress as of Monday afternoon.

The bill would allow merchants to route payments through an unaffiliated network.

“The impacts of this bill are clear: fewer options for consumers, greater threats to consumer data and privacy, weakened community banks and credit unions, and the disappearance of card rewards programs that families of all income levels use to stretch their budgets,” the letter reads.

“Far from increasing competition in the credit card marketplace, this legislation will reduce the number of credit card issuers competing for consumers’ business, wring out the competitive differences among card products, decimate card rewards programs (e.g. airline miles) valued by American families and our tourism sector, and put the nation’s private-sector payments system under the micromanagement of the Federal Reserve Board,” it adds.

“The Marshall-Durbin bill does all this by using legislation to award private-sector contracts to a small handful of the sponsors’ favored payment networks in order to pad the profits of the largest internet and national merchants who are raising prices on American families far more than the real rate of inflation.”

The organizations also note the legislation:

  • Hands control of the nation’s credit card system to breach-prone merchants.
  • Would render existing cards inoperable.
  • Guarantees profits and steers private contracts to favored card networks.

The letter also cites the Durbin Amendment’s interchange caps and the harm it inflicted on community banks and credit unions, despite their purported exclusion from the bill.