A Bill in Congress Could Impact Your Credit Cards!
08/18/2022
By: Jim Struble
We feel it's our duty to inform you when pending legislation potentially impacts our ability to serve you.
An important service we offer members is the use of debit and credit cards. These cards are convenient and add a sense of security that comes with knowing funds and transactions are guaranteed by your credit union.
When you use your credit or debit card, a small fee—known as an interchange fee—is incorporated into the transaction. This fee is charged to the retailer as a cost of being able to accept card payments. Interchange is what credit unions, other financial institutions, card networks, and payments processors use to guarantee retailers full payments and recover expenses associated with fraud and theft; fraud monitoring; issuing and reissuing cards; and administrative costs. It is important to know that you, the member, do not pay the interchange fee.
When a data breach or unauthorized use of a member's card occurs, Electro Savings Credit Union often bears much of the cost as we take action to limit our member's exposure. These costs include:
- Paying the member back for fraudulent charges,
- Reissuing a new card to the member,
- Credit monitoring for members who are victims of identity theft, and more.
Rarely are these costs assumed by the bad actors committing the fraud or the retailer where the fraud occurred. As the cost of these data breaches rises, it’s more important than ever for the card issuing financial institution to collect interchange fees.
New Legislation Would Put Your Data at Risk
Right now in Washington, there is a bill in the Senate that would allow retailers to pick and choose which network they use for credit card transactions. With only their bottom line as motivation, due to the protections provided by financial institutions like us, the retailers will choose the cheapest – not most secure- option. Interchange is the safety net that helps us help members like you when merchant data is compromised. Interchange should only be reduced when merchants are going to start being held financially responsible for their data breaches.
The changes proposed by these lawmakers will lead to less secure, less innovation, and higher-risk transactions for American consumers like you. Consumers, small businesses, and small community financial institutions will lose the most if this happens. We ask that you send a message to your federal lawmakers and tell them to oppose S. 4674, the Durbin-Marshall Bill.
The current system works!
Consumers have a safe, reliable credit payment system. Merchants are made whole at the time of sale. Credit routing mandates would hurt small businesses that are still recovering from the economic impact of the pandemic. With billions driven from the credit market, lenders will be forced to reduce small business lending to recoup their losses. Additionally, changing the current system could mean our credit cards might not work, with charges declined at some retailers or in some locations while traveling. Merchants are looking for the lowest cost option, not the most secure. We need to leave the routing decisions in the hands of those who bear the liability and consequences.
What We Need from You
At Electro Savings Credit Union, we value civic engagement. I hope you'll consider lending your voice to this important effort. Click here to learn more about the problem and send an e-mail to your U.S. Representative and U.S. Senators. Tell them you oppose S. 4674!
Jim Struble
President & CEO
Electro Savings Credit Union