Corkery: Interchange caps will hurt credit unions, communities
“If lawmakers take the bait on interchange reform, it won’t be big banks that suffer. It will be local credit unions and the communities they uplift,” Michigan Credit Union League President/CEO Patty Corkery wrote to set the record straight on the interchange system narrative.
In a CUInsight op-ed, Corkery discussed the so-called “swipe fee,” telling readers the truth about interchange:
“[Interchange] isn’t some hidden tax or backdoor cash grab. It’s the part of a transaction that helps cover the cost of fraud protection, payment system security and the infrastructure needed to process electronic payments safely and instantly. It also helps guarantee that your credit and debit cards are usable anywhere, and supports essential credit union programs, including access to credit, account services and fraud resolution.”
Corkery warned readers that any kind of cap or restriction on interchange revenue puts credit unions at risk. She pointed to the 2010 Durbin Amendment which capped debit card interchange fees.
“A Federal Reserve study showed that only 1% of merchants passed any savings to consumers, while 22% raised prices. Meanwhile, many credit unions were forced to cut back on free checking accounts and other member services, disproportionately harming low-income members.”
She reiterated that a cap on interchange revenue is nothing more than a scheme to benefit the country’s largest retailers.
“The average credit union member isn’t living lavishly off credit card perks; they’re buying uniforms for kids’ baseball teams, filling their gas tank and paying utility bills. And they expect those payments to be accepted, fast, secure and fraud-free.”
Corkery reminds readers that credit unions are champions of Main Street, not Wall Street. They support local businesses, and help people finance their daily lives while reinvesting in the communities they serve.
“Instead of rushing into reforms that would destabilize a system that works, lawmakers should look at the full picture and stand with the institutions that put people over profit every single day.”