Study confirms interchange changes would harm consumers and credit unions

Legislative efforts on the state and federal level to make changes to the interchange system would bring significant challenges that harms consumers—especially those in smaller communities and low-income households.  

A new study from the University of Miami’s School of Finance confirms America’s Credit Unions’ concerns about interchange legislation, including the Credit Card Competition Act and other state-level bills, as reducing interchange would lead to reduced access to credit.

With big box retailers pushing for Congress to reintroduce the Credit Card Competition Act, making sure lawmakers understand the harmful potential impacts to consumers and credit unions is a priority for America’s Credit Unions.  

The full report, titled “Why the Credit Card Competition Act and Similar State Bills Will Hurt Small Financial Institutions,” is available here. The report’s author, Indraneel Chakraborty, also published an op-ed outlining the results of his study in Real Clear Markets.

America’s Credit Unions joined the California Credit Union League last month to oppose a proposed state law that would limit interchange fees. Together with the Illinois Credit Union League, America’s Credit Unions is also challenging an interchange law in that state that would exclude tax from interchange calculations, the first such bill passed into law.

Washington, D.C., faces a proposed bill similar to the Illinois law, and the MD|DC Credit Union Association testified against it at a recent hearing. Department of Labor Federal Credit Union CEO Thomas Domingue wrote an op-ed in The DC Line about how the law would harm small businesses and consumers in the city. 

The CrossState Credit Union Association and Pennsylvania credit unions successfully stopped a similar bill from advancing in the state legislature last year.