Don’t change Interchange: the song

I guess it would be nice!

To learn more about how Interchange works, and how it may be affected by proposed regulations from Congress, visit the Electronic Payments Coalition.

Taking our message to Congress

First, thanks to all our members for supporting our Interchange petition drive. We had a lot of members agree with our message in the branches and here on our site, and we appreciate all the support.

Second, we’re taking a broader message to Congress:

[Credit unions are] gathering to advocate for credit union members– to protect them from rising costs, to allow the financial institutions they own build more capital, to help them help the economy recover and grow – and to ensure that their credit unions are around to serve them for a long, long time.

The Hill reports that CUNA’s Governmental Affairs Conference will be a gathering of credit union pros who will take the credit union philosophy – not-for-profit tax status, lower fees, sensible government regulation – to our representatives in Congress.

It should be a heated, active event, especially considering all that’s going on in the financial industry.

Contact Congress about Interchange

There’s a lot of activity going on with the Sen. Durbin Interchange amendment, and we’ve been fighting to keep Interchange as it is. The best way to make your voice heard is through direct contact to your congressional represenative.

Here’s the contact information for our local, south-central Michigan representatives – plus Rep. Gary Peters, who serves on the committee that’s involved in the Financial Reform Bill. Each representative’s website has e-mail information as well as the below address/phone number info.

Rep. Gary Peters
Washington Office: 1130 Longworth HOB | Washington, DC 20515
Phone: 202-225-5802
District Office: 560 Kirts #105 | Troy, MI 48084
Phone: 248-273-4227

Rep. Mark Schauer
Washington Office: 1408 Longworth HOB | Washington, D.C. 20515
Phone: (202) 225-6276
District Office: 800 West Ganson | Jackson, MI 49202
Phone: (517) 780-9075

Rep. Mike Rogers
Washington Office: 133 Cannon HOB | Washington, D.C. 20515
Phone: (202) 225-4872
District Office: 1000 West St. Joseph Suite 300 | Lansing, Michigan 48915
Phone: (517) 702-8000

Sen. Carl Levin
269 Russell Office Building, U.S. Senate | Washington, DC 20510-2202
Phone: (202) 224-6221

Sen. Debbie Stabenow
133 Hart Senate Office Building | Washington, DC 20510
Phone: (202) 224-4822

If you need some help on what to say during your phone call, we’ve done the work for you! Download our Interchange script, add your name and contact information, and send it off.

American Family Voices: wrong on Interchange

We got a funny fax the other day from American Family Voices, a lobby group that’s looking to enact Interchange reforms that could hurt our debit card program.

Here’s the fax. Pretty goofy, right? So goofy that it relies on that ol’ banker trick of trying to paint credit unions as do-gooder banks. AFV is trying to do two things at once: dig up the outdated banker argument, and – at the same time – spin it to fit their Interchange views.

It’s a bunch of quack. Here’s the full text of the fax we got:

If it walks like a bank, talks like a bank, and quacks like a bank… it should be TAXED like a bank.

In 1934, Congress gave not-for-profit credit unions tax-exempt status due to their unique role as lenders of last resort for the poor and underserved.

But today, credit unions comprise a $680 billion industry. This is not your grandfather’s credit union.

So why are these not-for-profit credit unions crying wolf about common sense interchange swipe fee reform?

Credit unions are carrying the water for credit card giants VISA and MasterCard— and the big Wall Street banks that helped cause the financial crisis.

It’s about protecting profits.

Interchange fees cost small businesses and consumers $48 billion every year.

If credit unions want to play with the big boys—and share in their profits—then Congress should tax them like banks.

Today, American Family Voices took out an ad in Politico to tell Congress that credit unions should no longer receive special treatment… and to make sure to pass the Durbin Swipe Fee amendment into law.

We’ve already made our position on Interchange clear, and we can argue about the merits of that all day long. But tying us together with the “big Wall Street banks that helped cause the financial crisis”?

I don’t think so.

Credit unions are tax-exempt because we’re member-owned, we have a volunteer board of directors, and we still serve the underserved. We don’t take the money we make and give it to stockholders or investment groups; we give it back to our members.

AFV claims that “credit unions comprise a $680 billion industry. This is not your grandfather’s credit union.” Well of course not – is growth a bad thing? Credit unions have grown partly due to customers’ disgust with big banks, but our industry is still dwarfed by the for-profit banking industry.

There’s nothing “common sense” about the Interchange reform that lobbyists like AFV are calling for. It’s not going to lower costs for consumers, and it may end up costing them more due to changes in debit card policies if this thing goes through.

Running a debit card program costs money, and Interchange helps credit unions like us pay for the system. You don’t get your electricity for free; you have to pay a power company to deliver that electricity to your home because the delivery costs money. Same with card programs. We hire in-house service employees to help you with your American 1 card questions, and we use Interchange to help pay their salary. And provide security. And provide convenience and a no-annual-fee debit card. Debit card programs don’t run themselves.

Groups like AFV, however, say that we make too much off Interchange fees, and that Interchange fees should only pay for the transmission of the account information. But that’s like paying for just the electrons that cross the power lines. What if a power line goes down? What if a transistor explodes? What if your entire town loses power? Who pays for that?

The only water we’re carrying is for our members. Visa and MasterCard can take care of themselves, and certainly Wall Street big banks can flex their own political muscles. We don’t need or want to help them. American 1 looks out for our members’ needs, first and foremost.

No quacking about it.

Be sure to write or call your local Congressional representative (including Senators Carl Levin and Debbie Stabenow in Michigan, plus local U.S. Representatives Mark Schauer, Gary Peters – who serves on the committee involved – and Mike Rogers) and let them know, as a member, you oppose Sen. Richard Durbin’s Interchange Amendment to the Restoring American Financial Stability Act.

Hey Congress: Don’t change Interchange

[UPDATE: The fight for Interchange has taken a quacky turn. Check out our response to American Family Voices lobbying efforts.]

The Financial Reform Bill is making its way through Congress, and one amendment – the Interchange Amendment – will make it more expensive and more difficult for credit unions like us to have a debit card program. In the end, you will end up paying more.

We highlighting this fight a few months ago, but now the Financial Reform Bill is getting closer to a vote.

What is Interchange? Interchange is the amount that merchants pay to debit card issuers, like American 1, to maintain our debit system. Interchange pays for security, fraud prevention, upkeep on the system, and more. The Interchange Amendment, however, will reduce the amount of Interchange we receive for each debit payment – meaning we could have to start charging our members to have a debit card.

This is bad for everyone. For one, debit issuers like us assume all the risk for debit card programs. Merchants are paid immediately, but American 1 has to worry about processing all that information. Interchange pays for that upkeep.

Two, merchants claim a lower Interchange will save consumers money. But when was the last time a store dropped their prices or saved you money? They’ll charge the same prices and pocket the rest (as they did in Australia), leaving members to pick up the tab. Or demand cash for each transaction.

Three, merchants could decline smaller debit issuers, like American 1, in favor of big issuers like Bank of America. And we all know big banks like BoA don’t have a friendly card program. But our members may have no other choice if their American 1 debit card is denied at big stores like Walmart, Target, and Home Depot.

All this is why we’re calling Congress and telling them to drop the Interchange Amendment to the Financial Reform Bill. American 1 can’t afford to have a great debit card program without a reasonable Interchange income. The amendment takes away that reasonable income.

To help, CUNA has set up a toll-free hotline to help connect you with your representative in Congress:

(877) 223-5275

Simply dial in your ZIP code and the hotline will direct you to your representative. Leave them a strongly-worded message that you would like them to drop the Interchange Amendment in the Financial Reform Bill. If you’re not sure of what to say to your representative (or their voice mailbox), use our handy script and let your voice be heard.

For more information, here are a few articles:

• National groups resist Interchange changes
• States join the fight against Interchange regulations
• New regulation doing ordinary consumers more harm than good
• Lower retail fees may not affect prices

Help us fight for Interchange

Your debit or credit card transaction goes something like this: You buy something at a retailer, either online or in your hometown, and you go to pay with your card. Your payment gets split, with a tiny percentage going to Visa or MasterCard, and the rest going to the merchant.

But now Congress is looking to change the whole system in a way that hurts American 1 and other financial institutions.

Merchants pay a fee for the privilege of using Visa/MasterCards payment infrastructure. That’s called interchange. Visa and MasterCard pay card providers, like American 1, a bit of that interchange for being a part of their system.

Everyone wins. The merchant gets an ease-of-use system for payments, Visa gets some income from the merchant, and we, as a credit union, get a fraction of that income for providing the debit or credit cards. Interchange is great because it helps credit unions of all sizes to issue debit and credit cards. We see interchange as a merchant’s fair share of the costs of this convenient system.

But it’s more than just convenience. Merchants, the ones taking the Visa or MasterCard payment, pay a small fraction for this service and reap most of the benefits, all while assuming none of the risk. American 1 has to cover the costs for fraud, card errors, and serving debit and credit card accounts. All the while, merchants benefit from the increased purchasing power such card systems provide. When you have a Visa account, for example, it’s easier to pay for more and bigger stuff. The merchant gets all that income, and only has to pay a small, single-digit percentage back to card issuers to maintain the system.

If credit unions like American 1 didn’t provide debit and credit cards to our members, imagine what would happen to local businesses. Or online retailers. Now think about all the other credit unions and banks across the nation. We all have to provide debit and credit cards, and providing that system costs money. The only way we can pay for this convenient system is to charge a fair interchange fee.

Now, Congress is looking to change the interchange fee structure, which means American 1 and other card providers could get less income for providing debit and credit cards. If this happens, our debit and credit card system could cost you, the member, more.

If interchange were reduced and could no longer adequately support American 1’s card system, you, as members, may end up paying more to use your debit and credit cards, or we may no longer be able to offer cards at all. Members of Congress should oppose merchants’ proposals to reduce interchange.

So we’re fighting back with a petition. You can stop in to our Home Office or Argyle Branch locations this week to sign the petition telling Michigan’s senators, Carl Levin and Debbie Stabenow, that we don’t want them messing with interchange income. Use those links to e-mail your senator, and your local Congressional representative, and tell them we don’t want any reduction in interchange income.