Interchange: the cost of doing business in the 21st century

Interchange is the cost of doing business in the 21st century, CUNA Deputy Chief Advocacy Officer for Federal Government Affairs Jason Stverak wrote to members of Congress Tuesday.  

The message was one of several planned from CUNA and Leagues over the August recess to educate members of Congress and their staffs about what the credit union difference means for members and communities.   

“The Big Box Bailout legislation (S. 1838 and H.R. 3881) is nothing more than the largest retailers asking Congress to extend a failed government mandate to credit cards. All to limit their costs when choosing to accept credit cards as payment, take choices away from consumers, and add to the growth they achieved on the backs of small businesses and consumers during the pandemic,” Stverak wrote.  

He also added why interchange works: 

• Interchange is the cost of accepting credit cards. Without cards, restaurants, retailers and grocers would deal only with cash and checks.
• Interchange fees help defray – but do not completely cover – the cost of fraud detection, credit monitoring, and fraudulent purchase protection that makes consumers and merchants whole when bad actors attack. 
• This legislation would double down on a bad idea. The debit card interchange legislation passed in 2010 didn’t save consumers money. The so-called “exemptions” for smaller financial institutions didn't work. The proposed changes to the credit card system with the Big Box Bailout Bill would bring the same problems, while threatening consumer data security and privacy and the availability of much needed credit for consumers. 

Grace Newcombe, vice president of federal advocacy and communications at the League of Southeastern Credit Unions, also chimed in on why preserving the interchange system positively impacts constituents in lawmakers' districts and state. 

“Last year alone, more than 422 million consumers were impacted by a data breach,” she said. “At a time when fraud is running rampant due to merchants' unwillingness to secure their data, America cannot afford a cheaper, less secure system.”  

CUNA’s latest interchange research with Cornerstone Advisors, The True Impact of Interchange Regulation, was also included in the communication sent to the Hill.  

This is the third message reinforcing the credit union difference sent to members of Congress over the August recess. Last week’s message urged Congress to update the Federal Credit Union Act.