Over the past few days I’ve had multiple questions from staff, colleagues, and even friends and family about the interchange vote on Wednesday: So, is that it? Why didn’t majority rule? What happens now? Should I still be asking members for help? So I thought I would take a few minutes to explain (from a credit union marketer’s perspective) what happened and where we go from here.
First, we did garner the majority vote (54-45), which is no small feat. Thanks to lobbying efforts by CUNA and our local grassroots work, the majority of the United States Senate felt that stop, study, start over was the most prudent way forward. Unfortunately, this amendment needed a two thirds majority (60 votes) to overturn current law.
Second, legislators were put into a tough position. Do I anger financial institutions or anger merchants? It was this feeling that led a number of senators to vote against the Tester-Corker amendment in anticipation of the Fed rule. These same senators have committed to helping credit unions when a final rule is drafted. In my opinion this is another case of credit unions not having a sound bite. Just like when bankers say “credit unions don’t pay taxes”, we have to say “yes we do, we pay…” and have an entire conversation. Merchants were able to say “big banks are killing small business”, “this system hurts consumers” or “debit expense is hurting my bottom line”, while we have to say “but you aren’t considering fraud costs, customer service and marketing expenses, network infrastructure” et cetera, et cetera.
Last, we absolutely need to keep telling members our story, why debit interchange is important, how members benefit and how a fixed price affects your credit union. We also need to recognize a re-occurring theme. Credit Union operations are continually being challenged legislatively. We formulate a litany of reasons that the current system should remain intact, but rarely follow through with consequences. Anyone remember the Card Act? We told legislators “annual fees will be back, rates will sky rocket”. But, at the end of the day we held pricing steady in order to best serve our membership. Remember REG E opt-in? We told legislators “free checking will cease to exist”, yet again the bottom line took a hit while our members (their constituents) lives went on as normal. And today you will no doubt pick up a trade publication with more of the same. One article will be possible outcomes due to the interchange income loss and the next page will have an article telling you to hold fast on free checking and debit cards. When did we become the little boy who cried wolf? How long can we continue to operate with razor thin margins?
So…keep up the good fight. Tell legislators why credit unions are important and how they can help us achieve our mission. Comment on pending legislation or Fed rules, it does matter. And most importantly, demonstrate the credit union difference everyday. I like to say “credit unions color outside the lines”…lets prove it.