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ICBA Testifies on Benefits of Interchange to Consumers and Merchants

Interchange Preserves Viability of Local Economies

Washington, D.C. (July 19, 2007)—The Independent Community Bankers of America (ICBA) told Congress that the credit and debit card interchange system has helped community banks and the communities they serve thrive, affording them business opportunities that would not be available if there were no interchange system.

"The credit and debit card system is working well and provides tremendous benefit to American consumers who are opting to use credit and debit cards in greater numbers," said John Buhrmaster, president of 1st National Bank of Scotia, N.Y., speaking on behalf of ICBA before the House Judiciary Committee Anti-Trust Task Force. "Intervening in a functioning market will only harm the merchants and consumers currently benefiting from an efficient process."

Buhrmaster said that the interchange system makes it possible for merchants to accept the credit and debit cards carried by millions of consumers. Merchants also receive guaranteed funds immediately when consumers purchase goods or services with credit or debit cards, and they don't have to worry about as many bounced checks. In addition, merchants, cardholders and card issuers all benefit from fraud detection systems.

"There was a time when, if you wanted to use credit for a purchase, you had to shop at a large department store that could afford an in-house credit program," said Buhrmaster. "Today, most consumers can use credit to shop at even the smallest merchant because most consumers carry a line of credit in the form of a credit card in their wallets."

"What small retailer could afford its own proprietary card nowadays?" Buhrmaster continued. "But because community banks like mine can provide credit and debit card services to merchants, my small business customers pay competitive fees, can accept plastic at the point of sale, are assured a consistent payment experience, and are protected against fraud. This acceptance is important to maintaining the viability of local merchants and the overall health of the community's economy."

Read ICBA's full testimony at www.icba.org.