CUNA Battling Grocers Over Credit Card Interchange Legislation
Learn why the credit union trade group CUNA is facing off with a national grocer's association over credit card interchange legislation.
CUNA, NAFCU and other financial trade groups all strongly oppose interchange proposal.
Already embroiled in its perennial fight with bankers, CUNA has a new nemesis—the nation’s grocers.
No, it’s not a food fight; it’s a battle over how people pay for their food.
The National Grocers Association is holding a “fly-in” this week for members to visit the nation’s capital and lobby lawmakers on various issues.
Those issues include changes to the credit card interchange system—a proposal that financial services trade groups vehemently oppose.
The Grocers’ Argument
The grocers are pushing legislation that would require the Federal Reserve to issue rules that would ensure credit unions and 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.
That legislation was introduced in the last Congress but was not passed.
Undaunted, the grocers are asking members of Congress to support the legislation once again.
“The legislation gives grocers the power to route credit card transactions through unaffiliated networks, which will interject much-needed competition to the credit card marketplace and lower costs for grocers and their customers,” the association contends on its website.
The grocers added that the lack of competition results in networks and financial institutions being able to raise credit card fees without any free-market forces to drive down costs.
Pushback from CUNA
Anticipating those arguments, CUNA sent an email to members of Congress this week.
“This week, grocers are headed to Capitol Hill. They will likely encourage you to support a new bill based on last year’s legislation,” the email stated.
CUNA said that while retailers like the convenience of credit cards and fraud protection that financial institutions provide, they do not like paying the cost of accepting credit cards.
“Interchange fees help defray (but do not cover) the cost of fraud detection, credit monitoring, and fraudulent purchase protection that makes consumers and merchants whole when bad actors attack,” the trade group wrote.
Additionally, they said, changes to the interchange system would, “allow retailers to use the cheapest processing option, with no requirement to keep consumers’ data safe or return savings back to them.”
And CUNA armed lawmakers and their staffs with a list of issues the association would like them to raise if they are visited by grocers this week.
Those issues range from how retailers protect credit card data to questions about whether grocers will lower their prices if interchange legislation actually results in lower costs.
In February, NAFCU President/CEO Dan Berger sent a letter to members of Congress urging them to oppose any effort to enact interchange legislation during the new Congress.
“This bill is unwarranted and represents a heavy-handed government intrusion into the credit card payments market that would hurt credit unions and consumers alike, while allowing the largest retailers to pocket significant cost savings,” he wrote.
And he bluntly reminded members that retailers have a choice.
“If they do not like the rules of the payment card system, they can always accept cash,” Berger stated.