Direct engagement and detailed data on the effect of interchange price controls are the foundation of continued advocacy against such caps. That’s what a panel focused on interchange efforts shared with attendees Tuesday at the 2024 Congressional Caucus. America’s Credit Unions Head of Regulatory Advocacy Ann Petros moderated, with America’s Credit Unions Director of Innovation and Technology Andrew Morris and Northpoint Insight researcher Glenn Grossman sharing insights.
The group shared details of ongoing interchange efforts and groundwork, leading into needs for the future. America’s Credit Unions, Leagues, and credit unions have met with each member of the Federal Reserve Board of Governors in opposition to the Fed’s debit interchange proposal, which would adjust all three components of Regulation II’s interchange fee cap with information favoring the largest, highest volume debit card issuers.
America’s Credit Unions’ filed comments on the proposal contain a detailed economic analysis on the many flaws in the Fed’s proposal.
“We’re trying to emphasize what is being taken away from both consumers and the services they are accustomed to when merchants demand more money for their pockets,” Morris said, adding the point is to “share what’s at stake, from favorable rates to community grants and scholarships, so many ways credit unions give back to members. It’s all on the table,” Morris said.
Recent U.S. Supreme Court decisions overturning the chevron doctrine and altering the statute of limitations to file lawsuits against the federal government also present opportunities for legal challenges.
“These two decisions, read in conjunction, bring a probably unprecedented opportunity for not only credit unions, but also merchants, to begin challenging rules the Federal Reserve has on the books, as well as future rules,” Morris said.
Interchange is also a state-level issue, with bills popping up in state legislatures. Since 2006, state lawmakers in 31 states and Washington, D.C. have introduced interchange bills. This year, Illinois lawmakers passed the first state interchange law as part of a late session budget bill, while credit union efforts stalled a similar bill in Pennsylvania. These bills would remove state sales tax from interchange calculations. America’s Credit Unions, the Illinois Credit Union League, and banking organizations filed a challenge to halt the Illinois law from taking effect.
“With all of the states considering these bills, it’s really important you speak to the representatives that would potentially vote on this legislation. There’s a lot of complexity that legislators just don’t understand, so they need to be educated,” Grossman said. “There’s a lot of misinformation that this can just be rolled out and is a quick fix. It cannot, because payments operate in a very interconnected manner.”
“There is already a modern, efficient, well-functioning payments system that would be thrown into chaos as a result of this law,” Petros said. “This law would undermine the significant benefits that credit and debit cards provide to consumers and businesses, and we also think it violates multiple federal statutes, including the Federal Credit Union Act.”
The challenge was filed in August in the U.S. District Court for the Northern District of Illinois, and a decision on the requested preliminary injunction could come this fall.
