Don’t Let Misguided “Swipe Fee” Attacks Hurt Credit Union Members and Small Businesses
A recent Detroit News op-ed painted a dramatic picture: a simple latte purchase secretly funnels money from Michigan’s coffee shops into the pockets of credit card giants. But what that narrative conveniently leaves out is this: credit unions — the very institutions that stand by small businesses and working families — are part of the same system now under attack. And if lawmakers take the bait on interchange reform, it won’t be big banks that suffer. It will be local credit unions and the communities they uplift.
Let’s set the record straight.
Interchange — the so-called “swipe fee” — isn’t some hidden tax or backdoor cash grab. It’s the part of a transaction that helps cover the cost of fraud protection, payment system security and the infrastructure needed to process electronic payments safely and instantly. It also helps guarantee that your credit and debit cards are usable anywhere, and supports essential credit union programs, including access to credit, account services and fraud resolution.
And contrary to the myth that these fees pad the profits of big banks, they are essential for financial institutions of all sizes, like the 4,000+ credit unions that serve more than 137 million Americans. That includes 6 million members right here in Michigan, living and working in all of our communities. Contrary to claims that interchange is an “industry racket,” in reality it is the cost for us to use credit cards instead of having to carry cash - it is really that simple.
Any legislation that caps or restricts interchange revenue puts your credit union in the crosshairs. In fact, we’ve seen this before. The 2010 Durbin Amendment capped debit card interchange fees, promising consumer savings. But a Federal Reserve study showed that only 1% of merchants passed any savings to consumers, while 22% raised prices. Meanwhile, many credit unions were forced to cut back on free checking accounts and other member services, disproportionately harming low-income members.
Even though that law said it wouldn’t apply to small financial institutions, the reality of the market meant they still felt the impact. The average per-transaction interchange fee for exempt debit issuers dropped nearly 31% from 2011 to 2021 (adjusted for inflation). Setting size limits doesn’t protect credit unions from market pressure, it just limits what they can do, while big box corporations benefit from lower costs and less competition.
Let’s be clear: this isn’t about small businesses — it’s about handing a windfall to the country’s largest retailers at the expense of financial institutions. The average credit union member isn’t living lavishly off credit card perks; they’re buying uniforms for kids baseball teams, filling their gas tank and paying utility bills. And they expect those payments to be accepted, fast, secure and fraud-free.
Michigan’s credit unions are champions of Main Street, not Wall Street. Credit unions are not-for-profit financial institutions owned by their members. They support local businesses, finance first-time homebuyers, and provide financial education and wellness initiatives. They help families buy that first car for their kids, and reinvest in the places we call home. Credit unions are about people, not profit. They are about educating your kids about financial literacy and donating books about saving to libraries around the state.
Instead of rushing into reforms that would destabilize a system that works, lawmakers should look at the full picture and stand with the institutions that put people over profit every single day.
By Patty Corkery, President/CEO of Michigan Credit Union League & CUSG
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