Congressional bill will hurt Iowa credit unions

There is a decadelong effort in Washington that would change how credit cards fundamentally work. Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL) have introduced the Credit Card Competition Act (CCCA). Despite the name, the proposal is anything but competitive and would pose a significant threat to American consumers’ financial security and will hurt Iowa’s credit unions and small banks.

Marshall and Durbin have been creative in trying to pass their legislation. Last year, they made a big push to pass it as an amendment to the National Defense Authorization Act, despite the fact that it has absolutely nothing to do with national security. Since that failed, the bill’s sponsors are pushing for a hearing in the Senate Judiciary Committee, which does not have jurisdiction over banking matters and the financial services industry.

At the heart of the matter is the complicated process known as interchange, the behind-the-scenes mechanism that takes place when your credit card is used to buy something. The Marshall-Durbin bill would reshape this process, allowing large corporate retailers, like Target, Walmart and Amazon, to choose which payment network processes the transaction. It would have some serious consequences.

Giant corporate stores would have the freedom to pick cheaper and less secure payment networks, rather than the network that the cardholder chose when they decide which credit card to apply for. Consumers would be exposed to a heightened risk of fraudulent activity. In the unfortunate event of unauthorized charges, it would be the financial institutions, such as your local credit union, left on the hook for the damages.

Supporters of Marshall-Durbin claim that mega companies like Target and Walmart will pass the savings back to the consumer. Unfortunately, we know definitively that this is not true because this proposal has been tried with your debit card and prices went up as a result, not down. This previous change to your debit card, known as the Durbin amendment, increased fraud by 59% since it was passed, according to a study by the Federal Reserve Board.

Credit unions stand apart from large financial institutions because they are deeply committed to the communities they serve, especially here in Iowa. The Marshall-Durbin bill, however, poses a direct threat to these community-focused financial institutions. Even with an attempted exemption, the credit card market writ large will be impacted, meaning that the money collected by local credit unions to support programs and provide benefits for their members would be lost.

Iowa is lucky to have a strong congressional delegation that understands our states’ values and will protect the best interests of Iowans. Sens. Chuck Grassley (R-IA) and Joni Ernst (R-IA) must continue to stand up for those values and focus on issues that really matter to Iowans right now, like the crisis at the southern border, not a corporate handout to big box stores. We urge our senators to stand up for small financial institutions, secure networks, and the safety of our communities.

Chad Kaeppel is president/CEO of Cedar Falls Community Credit Union.