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The Senate Judiciary Committee, chaired by Senator Dick Durbin, D-Ill., will meet today to discuss interchange fees at a hearing slated for 10:00 a.m. Eastern time. Ahead of the hearing, NAFCU President and CEO Dan Berger wrote to the committee firmly expressing how government interference with debit interchange under the decades old section 1075 of the Dodd-Frank Act, also known as the 'Durbin amendment,' has harmed community financial institutions and consumers. Berger also voiced NAFCU's strong opposition to any expansion of price controls and market manipulation related to credit interchange, through either antitrust or any related legislation.

NAFCU has strongly opposed efforts to employ arbitrary interchange price caps and routing restrictions under the Durbin Amendment, which according to Fed data has taken away $6 to $8 billion in revenue yearly from credit unions and banks. These caps are also one of the leading contributors to the decline in free checking accounts offered by banks and credit unions, according to a Government Accountability Office (GAO) study.  

“While envisioned to help consumers, the 'Durbin amendment' has instead lined the pockets of big-box retailers, with little evidence of price cuts for consumers or benefits to small merchants,” said NAFCU President and CEO Dan Berger, reiterating that any efforts to extend interchange provisions to credit cards is not only irresponsible, but also reckless, and should be rejected by the committee.

Although merchants have argued that extending debit card routing requirements to credit cards would increase competition in the market, Berger noted that extending the failed Durbin Amendment to credit cards would only broaden the wealth gap between small businesses and giant retailers, which has been amplified over the past several years and especially during the pandemic.  

"Since the 'Durbin amendment' was enacted, we have seen consumer prices increase, consolidation among community banks and credit unions, and several small debit networks have gone out of business," wrote Berger. "Big-box retailers and ever-expanding e-commerce giants have been the beneficiaries of a massive financial windfall.

"The top retailers in the U.S. diverted an estimated $250 billion in sales away from millions of small businesses and are now calling for government intervention in the competitive payments marketplace to increase their advantage," Berger added. "These are many of the same merchants, such as Wawa, Target, and Home Depot, who have suffered massive consumer payment card data breaches over the last decade and looked to financial institutions to clean up their mess and restore consumers who were harmed – all while trying to fight the interchange system that helps financial institutions aid consumers when their payment cards have been compromised at these retailers.”

Of note, NAFCU Monday joined several trade groups to write an additional letter to the committee, offering the following reasons on why expanding the Durbin Amendment is unnecessary and could be detrimental to the economy: 

• legislation intended to boost competition within the thriving payment industry is superfluous;  
• there is a distinct difference between credit and debit cards for consumers and financial institutions, expanding the Durbin Amendment to the credit market will increase the cost of credit and lead to less spending powers for consumers; 
• expanding the Amendment is a merchant group-led initiative to shift “billions of dollars of consumer credit card spending to less secure, less innovative, and higher-risk transactions;” and 
• consumers as well as small businesses will be restricted from choosing credit cards in a free market, that choice will instead be given to large merchants. 

Read Berger’s letter. NAFCU will monitor today's hearing and will provide credit unions with updates via NAFCU Today. Credit unions are also urged to weigh in with their Senators on this important topic via NAFCU’s Grassroots Action Center