VT Retailers Cite Future Credit Card Interchange Battle Posted by AVCU on 9:49 AM

Yesterday's Times Argus interviewed Ron Hance, president of Heritage Family FCU and Michael Tuttle, president of Merchants Bank, for their thoughts on the long term effects of the recently passed financial reform bill signed by President Obama. Hance cited both lower debit interchange resulting in higher credit union member costs, and keeping an eye on whether merchants actually pass along the benefit of reduced debit interchange to consumers, as they argued they would in their lobbying efforts.

Of particular note to credit unions and community banks is a quote by Tasha Wallis, executive director of the Vermont Retail Association:

I think retailers are going to pay very close attention to how they respond to this reduction because frankly there is still the issue of credit card interchange to take on. Passing on savings to consumers is certainly a way to show that further reform will further help consumers.

Unfortunately for card issuing credit unions and community banks, there's no easy way to monitor whether merchants actually pass along reductions in debit interchange to consumers by way of lower prices, as they argued they would in all of their lobbying efforts. If studies of similar industry reforms in Australia are any indication, such a pass-through of debit interchange reductions, borne by credit unions and other card issuers, will never happen.

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