The lesser of two evils: still evil

So I get an email from my credit union the other day asking me to “support credit unions” by writing letters through their lobbying arm to oppose Senator Dick Durbin’s amendment on debit card interchange. Interchange is the fee that banks charge merchants in exchange for processing transactions for customers who hold their debit cards. Long story short, Visa and Mastercard run the networks that make this all possible, give a big kickback to the banks that issue debit cards, and gouge merchants with the fees. It costs virtually nothing to run a transaction network and thus interchange is a money-making machine for the banks that get the kickbacks.

I hate corporate attempts to mobilize customers on a company’s behalf even in the best of times. But this campaign is a new low – Durbin’s reforms are milder than European laws regulating interchange, and it’s astonishing to see Visa and Mastercard strong-arming credit unions (as Kevin Drum details here) into this after the role easy credit played in causing our current financial crisis. And all this after I specifically went with a credit union because I can’t stand dealing with behemoths like Bank of America or Wells Fargo.

After an email exchange with Kevin, I sent the below email as a reply to my credit union’s plea for help:

Frankly, I’m disgusted by this kind of disingenuous campaign, and you should be ashamed of yourselves for trying to manipulate your customers into shilling for the financial industry on your behalf. Interchange fees on merchants are outrageously high (roughly 4x what European customers pay) and basically just translate to higher prices for consumers like me. Furthermore, as a credit union with assets under $10B, Keypoint would be barely affected by the amendment anyway. And it’s simply false that the amendment doesn’t contain provisions requiring merchants to honor all cards. It does.

This kind of solidarity on the part of banks, credit unions, and credit card companies against reform of an ancillary – but hugely lucrative – feature like interchange is exactly why we need tighter regulation. Once again, my financial institution has disappointed me. Silly me for assuming that a medium-sized credit union would be better than that.

I’m a hairs’ breadth from canceling my Keypoint account as it is; this kind of crap just increases my resolve to NEVER pay for transactions with my Keypoint debit card if I can at all help it.

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