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Stop Congress from Infringing on your Payment Rights

By June 3, 2010February 18th, 2020Credit Union

Auto Expert is a HUGE supporter of credit unions, not just because we’re owned by one, but we appreciate their emphasis on member service and the fact that their stakeholders is their membership, not greedy stockholders.   (Learn more about credit unions here.)  Credit unions are always fighting the “good fight” on the political streets in order keep their fees low.   The “Restoring American Financial Stability Act” (S.3217) was designed to protect consumers, and credit unions do support this effort.   However, at the last-minute, Senator Richard Durbin (D-IL) added an amendment called the “Durbin-Interchange Fee” amendment.

What does this Amendment mean?

Basically, this amendment allows large retail stores to negotiate with financial institutions for a reduced interchange fee.  The large retailers say that if the fees are reduced it will allow them to reduce their prices to consumers, but there is no language in the amendment requiring them to do so, which essentially allows them to pocket the extra profit.

What is Interchange?

Each time you use your VISA or MasterCard credit card or VISA/MasterCard Debit card, the merchant is paid immediately and the Credit Union receives what is described as an “Interchange” fee (paid by the merchant) through the card payment processing system. This fee reflects the merchant’s fair share of the costs of this convenient and beneficial payment system.  This is the fee that merchants are charged for the convenience of providing debit and credit card payment systems to consumers.   A portion of this fee is passed through to the financial institution to help support the cost of issuing debit and credit cards and to alleviate costs of fraudulent transactions.

Who benefits from this?

This amendment will mainly benefit large retail stores and large financial institutions simply because they have the transaction and debit card volume to negotiate discounts. This will give more power to the “Big Banks” while edging out the smaller banks and credit unions, as well as small businesses, in their ability to compete in this arena.

Since this amendment allows retailers to negotiate for Interchange Fee discounts, they can essentially choose which debit/credit cards to accept (and even charge a fee if you are not on their “preferred” card list) and which to reject, or to not allow the use of a debit or credit card for transactions under a certain dollar amount.

Importance of ‘Interchange’ for a credit union

At  your credit union, the income from interchange supports their credit and debit card programs and allows them to offer these cards with NO fees, low rates, free rewards and extra benefits such as their popular ATM surcharge rebate program. The credit union manages the costs of their card programs to ‘break-even’ by giving our members added benefits not readily found elsewhere.

Read more and take action at

If you’re not a credit union member, we highly recommend becoming one.  Especially, if you’re not happy with your current “Big Bank”.  Find out who our partner credit unions are by clicking here or find a credit union near you by clicking here.