Nussle: Interchange bill puts consumers on hook for big box profits

Big box retailers are seeking a bailout from consumers, and some members of Congress thing that's a good idea, CUNA President/CEO Jim Nussle wrote Monday in The Miami Herald. Noting the co-called Credit Card Competition Act would lower big box business costs while saddling consumers with the bill. 

Retailers claim they’ll share their savings with consumers by lowering prices. But that’s not likely," Nussle wrote. "Look at what happened the last time Congress lowered retailers’ cost of doing business by capping interchange fees on debit card transactions with the “Durbin amendment” to the 2010 Dodd-Frank financial reform law. Three-quarters of merchants didn’t change their prices at all. More than one in five actually raised prices. Just 1.2% reduced them.

"Big-box stores kept most of the money they saved. But most small merchants didn’t benefit from the fee caps," he added. "Two-thirds of retailers experienced no savings or failed to notice one way or the other. One-quarter saw their costs associated with accepting debit cards actually go up."

Nussle also noted that payment processing discounts and other "perks" for smaller went away post-Durbin Amendment, and that University of Chicago economists estimate the Durbin amendment has cost consumers between $22 billion and $25 billion since 2010.

"If Congress effectively slashes what retailers pay to accept credit cards, then issuers will face hard choices. They could scale back anti-fraud protections and expose individuals to more financial risk. They could hike fees. Others may issue fewer cards or stop issuing them altogether. That would reduce the availability of credit, particularly for people with less-than-perfect credit or no credit history," Nussle wrote. "Congress must not relieve big-box retailers of their cost of doing business. Doing so would threaten the security and sanctity of consumers’ finances."