CU, Financial Trades Lobby Against Durbin-Marshall Credit Card Bill

CUNA and NAFCU joined other financial trade groups in opposing legislation designed to expand the credit card processing industry. Learn why.

David Baumann


Aug 25



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David Baumann

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David Baumann

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CUNA and NAFCU joined other financial trade groups in pushing back against legislation to broaden credit card processing industry.

With members of Congress back home, financial trade groups—including CUNA and NAFCU—are mobilizing credit unions and banks to tell lawmakers to oppose Senate legislation designed to expand the credit card processing industry.

S.4674 would require the Federal Reserve to issue rules that would ensure banks that currently use the four-party card processing system be required to use at least one affiliated network in addition to Visa and Mastercard.

“This would inject real competition into the credit card market—opening the door for new market entrants such as current debit-only networks, encouraging innovation and enhanced security, creating backup options if a network crashes, and exerting competitive constraints on Visa and Mastercard’s fee rates,” bill sponsors, Senate Judiciary Committee Chairman Richard Durbin, D-Ill., and Roger Marshall, R-Kan., said when they introduced the legislation last month.

Opposition From Credit Union Groups

While it is questionable whether the House and Senate would consider such controversial legislation as the mid-term elections approach, the financial services industry is not taking any chances.

“We need to send a strong message to lawmakers that consumers, small businesses, and small community financial institutions will lose the most if this happens,” stated CUNA Deputy Chief Advocacy Officer Jason Stverak.

“This bill would allow merchants to bypass established secure payment networks. We strongly oppose it, as it’s a further handout to big box retailers at the expense of consumers,” he added.

CUNA has launched its Member Activation Program to try to motivate credit union members to oppose the legislation. Participating credit unions can download, customize, and distribute message templates to their members.

Stverak noted earlier this week that some 20,000 messages have been delivered to lawmakers during the past ten days.

NAFCU Vice President of Legislative Affairs Brad Thaler said that the trade group is urging credit unions to contact House and Senate members about issues, including the credit card legislation.

CUNA and NAFCU Letters

CUNA also joined credit union leagues and banking trade groups in sending a letter to senators outlining their views on the bill.

“Far from increasing competition in the credit card marketplace, this legislation will reduce the number of credit card issuers competing for consumers’ business, wring out the competitive differences among card products, decimate card rewards programs valued by American families and our tourism sector, and put the nation’s private-sector payments system under the micromanagement of the Federal Reserve Board,” the groups wrote.

The letter continued, “The impacts of this bill are clear: fewer options for consumers, greater threats to consumer data and privacy, weakened community banks and credit unions, and the disappearance of card rewards programs that families of all income levels use to stretch their budgets.”

NAFCU’s chief also wrote his own, separate letter to lawmakers.

“The requirements in the legislation for multiple networks on credit cards mean that consumers will lose choice when it comes to credit cards, as big box retailers could now pick which network will process transactions and go with the cheapest and potentially less secure option,” NAFCU President/CEO B. Dan Berger stated.

Retail Groups in Support of Bill

But Durbin contends that the legislation will help consumers.

“Bringing real competition to credit card networks will help reduce swipe fees and hold down costs for Main Street merchants and their customers,” he said, as the bill was introduced.

And retailers have mounted their own campaign to convince Congress to pass the legislation.

“This is a giant step forward in bringing about the transparency and competition retailers have sought for years,” said Leon Buck, vice president for government relations, banking, and financial services at the National Retail Federation.

The Merchants Payments Coalition (MPC), a group representing retailers, supermarkets and other retail businesses, also is pushing hard for enactment of the bill.

“This landmark bill would end a part of the Visa-Mastercard duopoly that has blocked competition for decades,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “By requiring card networks to compete over who gets to process a transaction, exorbitant fees that have skyrocketed could finally be brought in touch with reality. This is a solution that would let a free, fair, and competitive market determine prices in the payments industry just as it does in virtually every sector of the economy.”

But NAFCU’s Berger has a simple solution should merchants contend they are being hurt by the current system, saying, “If they do not like the rules of the payment card system, they can always accept cash.”

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