news.cuna.org/articles/122996-gowest-advocates-share-data-combating-interchange-legislation-with-congress
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GoWest advocates share data combating interchange legislation with Congress

September 7, 2023

GoWest Credit Union Association and its member credit union advocates met with Senators and Congressional representatives throughout the August recess in their home districts across all six states represented by the association – Arizona, Colorado, Idaho, Oregon, Washington, and Wyoming. They are leveraging the opportunity to share the actual facts about how the Credit Card Competition Act will be harmful to their constituents.

Two key resources in their toolbox are a comprehensive analysis by the consultancy Cornerstone Advisors documenting the harmful effects of the CCCA’s predecessor legislation, the Durbin Amendment, and GoWest’s high-level infographic showcasing Cornerstone Advisors’ rich data.

“As we advocate collaboratively to pull out all the stops to defeat S.1838/H.R. 3881, we know it’s critically important to provide as much real data as possible showing the legislation is misguided,” said Ryan Fitzgerald, GoWest’s senior vice president, advocacy. “In our meetings, we have received very positive feedback on Cornerstone’s excellent analysis, and some Members of Congress have also asked for a brief overview to aid in their discussions before they take a deeper dive into the full report.”

The Cornerstone Advisors analysis documents the fact that the Durbin Amendment was costly for consumers and the community financial institutions serving them, and those impacts would only worsen if debit interchange price controls and restrictions are expanded to include credit cards.

Key data points being shared with Congress include:

  • The promise of the Durbin Amendment was not fulfilled.
    • Only 1% of merchants passed savings from reduced interchange fees along to consumers, 77% did not, and 22% increased prices. 
    • The number of free checking accounts offered by financial institutions with assets of $10 billion or over dropped from 60% to 20%. Average checking fees for consumers rose from $4.34 to $7.44 a month.

  • S. 1838/H.R. 3881 Threatens Consumer Safety and Access
    • Merchants, who benefit greatly from the convenience of credit card purchases while bearing little to no responsibility in managing the costs of fraud, will be allowed to determine which networks credit card transactions are processed on. They may select the least expensive – and the least secure.
    • This would require financial institutions to replace existing credit cards at a projected cost of over $3 trillion.

“Member-owned credit unions use interchange funds to cover the costs of fraud prevention and detection, replacement of compromised cards, and losses due to data breaches, and with fraud on the rise this legislation would make less funding available to protect consumers,” Fitzgerald said. “Cornerstone Advisors also found that if the legislation passes, 67% of small to medium-sized businesses won’t pass savings along to shoppers – a double whammy for consumers.”