America’s Credit Unions President/CEO Jim Nussle highlighted the credit union industry’s investment in payment technologies and the role of interchange in fraud prevention in a letter to the Senate Banking Committee (SBC) Wednesday ahead of its hearing to examine scam and fraud trends.
“Credit unions invest significantly in both security and compliance management systems to prevent unauthorized electronic fund transfers (EFTs) and support faster, innovative payment options for their members,” wrote Nussle. “The credit union industry’s commitment to relationship banking also gives members confidence that if they have a problem, they can count on their credit union to make every effort to resolve the issue.”
Nussle also noted credit unions are increasingly investing in peer-to-peer (P2P) payment options for their members. However, he urged the SBC to not make credit unions liable for the “misdeeds of fraudulent actors” because it would limit consumer choice by straining credit union resources.
Additionally, he stressed the negative impacts the big box bailout bill (S.1838/H.R. 3881).
“This bill would require financial institutions to allow credit card transactions to be routed via an alternative network,” Nussle noted. “Additionally, the bill contains an explicit requirement that card issuers enable all types of transactions and security protocols, even if a credit union finds that these methods are unnecessary, unaffordable, or unsecure.”
He added that credit unions help to cover costs when a customer incurs fraud, but emphasized “[a]ny reduction in interchange fees would directly affect credit union investment in fraud management systems and processes that are dedicated to reducing fraud risk in the system—forcing credit unions to increase costs to cover these necessary expenses.”
Of note, America’s Credit Unions also released a longer form video that goes more in-depth to address misinformation about interchange controls and provide insights from real people who would be affected by the legislation.
The association will continue to engage lawmakers on credit union priorities.