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ICBA Opposes Misguided Interchange Legislation

Bill Would Mean Less Choice, Higher Costs for Consumers

Washington, D.C. (Oct. 8, 2009)—The Independent Community Bankers of America (ICBA) urged Congress to abandon misguided interchange legislation. The Credit Card Interchange Fees Act of 2009 (H.R. 2382) would lead to fewer choices and higher costs for consumers and small merchants.

“ICBA strongly supports an interchange system that allows our nation’s more than 8,000 community banks to provide valuable services to their customers,” said Sen. Ann Duplessis, senior vice president at Liberty Bank and Trust in New Orleans and member of the Louisiana State Senate, in testimony before the House Financial Services Committee. “Our nation’s Main Street community banks want to continue to provide valuable credit- and debit-card products to consumers, and acquiring services to local small businesses, with rates and terms better than they can expect from our larger competitors.”

Merchants receive enormous benefits when their customers use credit and debit cards, not the least of which is a safe, secure and easy transaction. There are costs inherent in accepting all forms of payments, particularly when it comes to cash and checks. By working with a community bank, merchants are able to realize significant cost savings and additional profits by accepting electronic payments.

Today, consumers are able to obtain debit and credit card products through their local community bank in large part thanks to an interchange system that provides equity, fairness, and competition for everyone – consumers, merchants, and card issuers. Interchange revenue allows community banks to compete on equal footing with the largest financial institutions by offering these services, bundled with the long-term relationship-building services unique to community banks. Community banks generally offer lower rates and fees and better, customer-oriented services than the largest financial institutions.

H.R. 2382 would allow large merchants to further disadvantage their smaller competitors by undoing the payment systems rules that currently benefit smaller businesses. It would also begin the process of shifting a retailer’s cost of accepting electronic payments onto consumers by eliminating consumer protections inherent in the current payment card systems.

H.R. 2382 would lead to less competition in the credit- and debit-card markets, leading to fewer options and higher costs for consumers.

Read ICBA testimony at www.icba.org.