Despite a valiant effort by credit unions, community banks and other card issuers, the United States Senate failed to pass the Tester-Corker Amendment that would have delayed the implementation of the debit card interchange fee cap (mandated by last year's so-called Durbin amendment). The Amendment also called for study of the issue and its impact on consumers and community financial institutions. Sixty votes were needed to pass the Amendment; the vote failed on a 54-45 tally.
Much of the banter on the Senate floor today was between Senators Durbin and Tester. The former arguing against perceived abuses by mega banks toward merchants, and the latter in favor of protecting community banks and credit unions. Although credit union desires weren't successful, some points to keep in mind are . . .
- Over 1/2 of the Senate voted in support of further study before implementing interchange controls.
- That's 2/3 more than those who supported us in last year's Durbin amendment vote.
- Some Senators voting against the Tester-Corker amendment said they wanted to first see the final Fed regulation, and that they would assist after it is published.
- Considering the heated debate we generated on the issue, it's likely safe to say that legislators won't have the desire to challenge credit card interchange for some time to come.
- Opponents to the Tester amendment, like Vermont Senators Sanders and Leahy are so adamant that credit unions are protected by the so-called carve-out for institutions $10B and below that we have the opportunity for them to press the Federal Reserve to insure it will work in the final regulation, and to press them to act if it does not.
Clearly, today's Senate vote is disappointing, but there are still many unknowns. What do you think will happen to the debit payments system? Will VISA and MasterCard abide by Congress' desire for two interchange tiers? Will local Vermont merchants try to steer customers to lower interchange mega bank cards? Tell us your thoughts.
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4 comments:
I am wondering how long we as an industry are going to sit idly by and let Sanders, Leahy and Welch consistently vote against our interests. If we in fact have a deep penetration of Vermonters why don't we dedicate ourselves to electing representatives who will support our cause? I for one have had enough!!
I'm very disappointed by today's vote,as in the end it will be the member/consumer who will end up picking up the tab for today's legislation. If there is a silver lining, it's that the credit union voice was clearly heard and we came within a whisker of overturning legislation that passed by a huge majority just one year ago.
I sure hear and share your frustration on today's debit interchange vote. The fall-out from today's vote COULD have dramatic effect on the payments system and every credit union's debit card program. Sure feels like a huge can of worms that is far more complex than anyone was willing to give adequate time to study, even though they think they did. A classic lobbying case of conveying misinformation or just plain lack of knowledge - you have to judge which.
I was underwhelmed by the communications efforts by CUNA and other CU organizations in regards to this legislation. It came off as shrill, unconvincing, and self-serving. It put us on the side of the big banks and against consumers and small retailers. As NPR reported this morning, US debit card fees are the highest in the world. That is an untenable position for us to defend. We must now live with the legislation. Rather than castigate our representatives in Congress for not siding with the CUs, we should look at how we can do a better job of emphasizing why CUs are better than banks at serving our members financial needs.
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