Consumers here in Georgia and across the country already feel the rising costs of inflation, whether they are at the grocery store or at the gas station. Yet, Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) are still pushing for legislation that would change our payment systems for the worse, negatively impacting Georgians in its path. We need our Congressional leaders to stand up against this legislation.
The Credit Card Competition Act of 2022 puts more power into the hands of the government by placing a federal mandate on credit card routing. While supporters of this legislation claim it would bring down the cost consumers pay at the store by limiting the small fees that merchants pay when they accept credit card transactions, data proves this is not the case.
After the original Durbin Amendment which targeted debit card fees was implemented in 2011, a Richmond Fed report found that 98% of merchants did not pass savings from debit regulation to consumers and over 20% of merchants actually increased prices. This mandate also forced many financial institutions to eliminate debit card rewards programs that many families use to make the most of their dollars. Senators Durbin and Marshall now want to take away credit card rewards programs entirely. Loyalty programs are still the biggest advantage of credit over debit. If the industry is forced to give up interchange, then most credit unions will have to drop their loyalty programs altogether. Eliminating these programs would remove rewards frequently used by families of all income levels, including airline miles, cash back, and more. Last year, our members cashed in over $1.4 million in rewards. It would be unfair to take this benefit away from members and their families.
Credit interchange helps to offset the cost of cardholders’ much-loved rewards, as well as provide less liability to the cardholder by covering the risk of fraud. Credit unions and banks rely on retailers to pay a very small fee (typically 2% of a transaction) to assist with fraud protection. Zero liability also comes with a considerable cost for credit – debit cardholders may be liable for the first $50. Online transactions are significantly riskier, thus making interchange rates higher. Reduced interchange income will result in less time and fewer resources allocated to protecting members from fraud, issuing replacement cards, and investing in the latest security.
Unfortunately, there are now efforts to attach this credit card legislation to the National Defense Authorization Act, otherwise known as the NDAA, or another appropriations package. Attaching non-defense legislation to the defense spending bill is a disservice to our valued military members and will reduce access to much needed affordable credit and rewards programs.
At Robins Financial Credit Union, we pride ourselves on our military background and our unparalleled ability to serve those who defend and protect us. We were chartered in 1954 to serve the civilian and military personnel, as well as their families, of Robins Air Force Base. While we have since grown our membership to serve Georgians in 45 counties, we have never wavered from our original mission to be member focused, financial partners, and community proud.
Efforts to force expensive routing mandates onto Americans, especially through defense legislation, should not be allowed to happen. As history has proven how ineffective interchange legislation is in practice, Congress should reject efforts to include this non-germane bill in the defense spending package.
As the cost of living continues to rise, Congress should instead be working to preserve access to safe, affordable credit for communities across the country. At Robins Financial Credit Union, we are proud to be serving communities with low rates and resources that place members on a path to financial independence.
Christina O’Brien is the President and CEO of Robins Financial Credit Union, where she has proudly worked to support and grow membership for nearly 30 years. In addition to serving the members of Robins Financial, Christina currently volunteers her expertise and leadership at various community and industry organizations such as the Middle Georgia State University Foundation Board, 21st Century Partnership Board, New Town Macon Board and the Members ATM Alliance Board. She has also previously served as a Board Member for Robins Regional Chamber of Commerce, Robins Regional Education Foundation, United Way of Central Georgia Campaign Cabinet, and Central Georgia Chapter of the American Red Cross.
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