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Executive Letter: Fending Off Interchange Restrictions

Rose Oswald PoelsBy: Rose Oswald Poels

As many WBA members know, our Association has been fighting off proposed interchange regulation for over a year. At the state level, WBA and banking advocates from throughout Wisconsin successfully halted AB 587/SB 572, which called for the prohibition of interchange fees on the tax portion of a transaction. While grassroots involvement by Wisconsin bankers has helped us clear one hurdle, it is clear that retailers and legislators alike are prioritizing moving this issue forward at both the state and federal levels.

In late July, Sen. Dick Durbin (D-IL) and Sen. Roger Marshall (R-KS) introduced the bipartisan Credit Card Competition Act of 2022 (S.4674). The proposed legislation — which is largely opposed by members of the American Bankers Association (ABA), Independent Community Bankers Association (ICBA), and banking trade associations from across the U.S. including WBA — would require banks exceeding $100B to offer customers at least two networks to process credit cards — one of which is required to be a provider other than Visa or Mastercard. According to Durbin, this proposed legislation “injects competition into the Visa-Mastercard duopoly.”

Last week, the House companion to the Credit Card Competition Act of 2022 (H.R.8874) was introduced by Rep. Peter Welch (D-VT) and Rep. Lance Gooden (R-TX). Again, legislators claim that this proposal will cut costs for businesses and families.

Although Wisconsin’s community banks are not the current target of this proposed legislation, the Credit Card Competition Act of 2022, active now in both the U.S. Senate and House, will require a complete and costly overhaul of the U.S. payment system that every consumer and institution will feel the impact of.

In addition, credit card merchants would be given the ability to force transactions to cheap, less secure networks; more Americans would lose access to valued cash-back and reward programs that drive spending or credit altogether; and with an increase in regulation, the independence and competitiveness of community banks is put at risk.

For the sake of our current financial system, the security and choice of all consumers, and the continued prosperity of community banks across the state and country, I encourage you to join WBA in opposing these two proposed legislative actions.

Grassroots advocacy is a critical component of WBA’s advocacy efforts as we need banker involvement to help ensure the industry’s voice is heard. Please make time to call your House Representative or email them a message — let them know that you stand with the best interest of our communities and customers in mind. You can easily take action now on ICBA’s website and ABA’s website. Your engagement has time and time again proven vital and highly effective in fending off threats to our industry. Thank you in advance for your help informing our congressional delegation of these concerns.

If you have any questions regarding how these proposals will impact Wisconsin community banks or wish to designate an Advocacy Officer to assist the Association in coordinating regulatory, legislative, and community advocacy efforts, please contact WBA Vice President – Government Relations Lorenzo Cruz or me.