Write the Congress to Support your Credit Union

I am writing about an issue that could negatively impact you and all members of our credit union. The U.S. Congress is considering legislation that would reduce the amount of interchange fees paid by merchants when they accept a credit or debit card for payment. Interchange fees help pay the cost of processing credit and debit cards payments, with a portion going to card issuers like our credit union to cover risk and operations cost.

This issue is important to you, a member and owner of this credit union, since a percentage of our annual net income is derived from interchange income. It allows our credit union to offer low- or no-cost products and services including free checking, great rates on loans and no annual fee credit cards. Interchange income also helps absorb the cost of fraud that takes place on credit and debit cards.

A significant loss in interchange income could mean our credit union would have to charge more fees, increase interest rates on loans, or even suspend some products and services. Credit and debit card programs are an important service, but if merchants don't pay for their benefits of the system, it's unfair.

Credit and debit cards have removed the risk of payment for retailers. When retailers accept checks, they bear the risk for the check. If the check is bad, the retailer doesn't get paid. On the other hand, if a person doesn't pay their credit card bill, or if there's fraud, then the credit union still pays the retailer. To cover these risks and the cost of the system, there's a small fee on each transaction paid by merchants. And the risk is substantial.

Merchants claim that interchange fees add to consumer's costs and argue that if these fees were reduced, the savings would be passed on to their customers. Yet, in a recent Congressional hearing, a merchant trade representative said his industry would object to any language in the bill that would ensure savings would be passed directly onto the consumer. Clearly it's not about saving consumers money at all.

To express your opposition to harmful interchange legislation, please go to http://www.cuvoice.com/ and send an email message directly to your congressional representative. The more credit union members that weigh in on this issue, the greater chance we have to stop the legislation in Congress.

Thank you for your support.