By: Merry Pateuk, SVP, Industry Engagement
As we continue to navigate the COVID-19 pandemic, the theme of gratitude keeps many of us afloat and moving forward. Not only am I grateful for the multitude of authors that have continued to publish books and the entertainment industry for producing such a wide variety of streaming content to bury myself in during these challenging times, but, closer to my day job, I’m also grateful for the foresight and technology deployed within the payments industry that has enabled commerce to continue in a contactless environment.
But we can’t be complacent – even when systems that fairly benefit all parties are working as designed. Efforts are underway in Washington that could potentially impact credit union payments programs, as well as the overall health and security of the U.S. payments ecosystem, while creating negative implications for credit union members and small businesses amidst the current economic recovery. It is critical that we stay engaged.
Debit Card Interchange
The Federal Reserve has proposed adopting clarifications to Regulation II (Debit Card Interchange Fees and Routing) that were implemented as required by the Durbin Amendment. If adopted as proposed, issuers would be required to enable at least two unaffiliated networks for card-not-present debit transactions, such as online purchases.
The proposed modification could result in reduced interchange revenue, coupled with increased fraud risk and compliance costs for debit card issuers. Based on our analysis of the current draft of the rule – and that unaffiliated networks include Visa and Mastercard – we anticipate that most PSCU debit card issuers would not need to change their network participation. However, we must remain vigilant as we await the final review.
What’s At Risk
The bigger threat – and with a wider negative impact – are efforts aimed at expanding at least portions of the Durbin Amendment to include credit cards, such as requiring two unaffiliated network options on credit card purchase transactions. While no specific rulemaking has been proposed at this time, we encourage all credit unions to be proactive in contacting your legislators now to preemptively counter any credit card regulations and keep the economy moving. Both CUNA and NAFCU have online Grassroots Action Centers that include sample message templates and easy, clickable distribution links for your use. Click through now and let your legislators know what is important to you.
• CUNA Grassroots Action Center (select “Interchange Works: Protect My Card”)
• NAFCU Grassroots Action Center (select “Oppose Legislative Intervention on Interchange”)
In her role as SVP, Industry Engagement, Merry Pateuk fulfills PSCU’s strategic objective of leveraging the cooperative’s scale to advocate on behalf of the credit union industry. She cultivates relationships between PSCU and local, state and national organizations that support credit unions and works collaboratively with industry partners to ensure there is alignment on key topics and a cohesive voice to ultimately strengthen credit unions’ position in the market.
Merry is on the Board of Directors of America’s Credit Union Museum and served on the systemwide CUNA COVID-19 Restart and Recovery Task Force and the CUNA Credit Union Awareness Committee. She champions PSCU’s efforts with numerous other system partners, actively engaged in committee participation with Filenes Research Institute, Credit Union Miracle Day and Credit Union Cherry Blossom Ten Mile Run, African American Credit Union Coalition and CUES. Merry also earned the Credit Union Development Educators (CUDE) and Africa Development Educators distinction from the National Credit Union Foundation.