The President's Perspective

​North Dakota credit union advocates meet with Senator Cramer and other interested parties in Bismarck to discuss the interchange issue; plus a few special items of interest! 

​Greetings and Happy Monday!

Welcome to summer!  It certainly appears that the “dog days” of summer came early this year.  I hope you’re all managing the early June heat – stay cool and safe out there.

As we have been sharing the last several weeks, debit and credit card interchange fees for financial institutions is a top-tier issue.  In late April, the North Dakota Retailers and Petroleum Marketers filed a lawsuit against the Federal Reserve to reduce the interchange fees that are paid to credit unions, financial institutions, and other card issuers each time a consumer swipes their debit card.

Given that the lawsuit was filed here in North Dakota, it appears that we are in the middle of this debate and that our region is the new “battle ground” on this issue.  Many of you may recall the debate we had (and lost) just ten years ago when debit card fees were capped with the Durbin Amendment, named after Senator Dick Durbin, (D-IL), which authorized the Fed to set the cap at 21 cents per transaction. 

Here is what we know.  We know that Senator Durbin is considering introducing legislation, or an amendment that would again impact interchange fees and rates that networks and card issuers can charge.  We have also learned that Senator Durbin is working towards getting bipartisan effort to get this passed.  We have also learned that Sen. Cramer (R-ND) is being targeted by Senator Durbin to co-sponsor this bill/amendment. 

Last week, Senator Cramer invited representatives from the North Dakota Retailers, the Petroleum Marketers, and the North Dakota financial institutions to meet in Bismarck for a face-to-face dialogue on the issue.  This is something that would never happen in Washington, D.C.  Representing credit unions were Steve Schmitz, President/CEO First Community CU (Jamestown), Jeremiah Kossen, President/CEO Town & Country CU (Minot), along with myself.  (Photo L to R: Senator Cramer; Steve Schmitz; and Jeremiah Kossen.) 

The dialogue was good, as each industry was given the opportunity to share their concerns and prospective impact if revisions were considered. While we know going in that each group had their ‘lines in the sand,” the dialogue was cordial, and everyone was heard from.  This is a very complicated issue.  Many feel that competition among networks, exchanges and the open market keeps the interchange costs reasonable.  Others, such as card issuers and financial institutions, need the interchange fees to keep pace with the increasing cost of fraud and losses.

Our takeaway from the meeting is that Senator Durbin will be introducing some legislation or amendment that will have an impact on interchange structure, either on capping fees, offering additional network competition (targeting the two largest networks Mastercard and Visa), or perhaps, even introducing fixed rates for merchant service providers (MSP, those companies providing the point of sale of products and access to exchange networks) as well as card issuers and financial institutions.  This will more than likely come out sometime this summer and any bill/amendment will be likely attached to a spending omnibus bill later this fall or towards the end of the year.  This means that revisions are coming, and the reality of their passage is very likely.  We need to ensure that any bill or amendment needs to consider the fixed costs financial institutions and card issuers absorb to process transactions.
 
Data shows the average interchange rate in the U.S. is around .3% for Debit Cards, and 1.8% for credit cards.  However, these numbers have very little value due to the enormous range of possible rates for any given transaction.  They merely reflect the average of all possible interchange rates charged by all the major credit card associations.

Join us for Q1 2021 Open Your Eyes update
As you know, we’ve been working with the Credit Union Awareness team to keep the Open Your Eyes to a Credit Union® campaign going strong in the Dakotas!  We appreciate our Dakotas contributors’ support and look forward to sharing the latest performance data and findings with you in our Q1 2021 Campaign Update webinar.  Please join us on June 9th at 10am Central for the latest on this important initiative.  Click here to register: Dakotas Open Your Eyes Campaign Update Webinar.

During our webinar, we will provide a deep dive on Open Your Eyes campaign performance nationwide, covering topics including media budget and impact; overall campaign performance; creative asset review and performance; updates, upgrades, and planned new features and integration.  We will also be fielding any questions you have. 

Apply Now for 2021 CUNA Awards
While we just celebrated the achievements of our member credit unions during the Summit in Fargo, it’s already time to submit your applications for CUNA's National Awards.  These awards are designed to encourage and recognize credit unions that demonstrate social responsibility (the Dora Maxwell Award), credit union philosophy (the Louise Herring Award), and financial education (the Desjardins Awards).  Find more information here on our website and submission instructions and forms are located here on CUNA’s website.  Don’t miss the June 25 deadline!

Who Loves Their Credit Union?
Several weeks ago, I asked you to mark your calendars for July 30 in anticipation of something big.  We can now share that on that day, credit unions and leagues across the country are going to try to “break the internet” with an organized social media campaign led by the Illinois Credit Union League.  This day, the credit union movement will come together to inspire credit union teams and members to share what’s best about their CU experience using a common hashtag.  We look forward to creating a digital wave of authentic, high-energy conversation on social media to raise awareness about the amazing things our credit unions do every day for their members and communities.  (Shown below is just one sample of the many graphics available!) 

Making it happen is simple for you, thanks to the resource hub developed by our friends at the Illinois Credit Union League.  Here, you can sign up to participate and access everything you’ll need to plan and engage members in this exciting, nationwide collaboration.  You’re welcome to personalize the materials with your own branding, design your own content, and add those unique touches that will speak to your membership.  Just remember to keep that hashtag under wraps until July 30 for the biggest impact!     

Have a great week!

​President/CEO
Dakota Credit Union Association