President Message

Protect Consumer Privacy: Connecticut Credit Unions Unite Against State Bill Threatening Interchange Regulation

Consumer privacy is under threat in Connecticut as House Bill 5489 threatens to regulate interchange fees at the state level by removing interchange fees from the sales tax portion of retail sales.

Over the past 17 years, state legislatures across the nation have rejected similar proposals, recognizing the importance of centralized governance of payments. However, the current threat looms large with House Bill 5489. We must prevent Connecticut from becoming the first state to pass this law. The League is front and center in this fight and standing shoulder to shoulder with Americas Credit Unions to kill this damaging legislation. We call on all Connecticut credit unions to stand together in opposition.

If passed, HB 5489 would expose sensitive, itemized purchase details into the global payments system. Not only would this intrusion into consumer transactions undermine trust and confidence in the financial system, but it would also create the largest concentration of detailed consumer data that would become the prime target for cybercriminals.

As our credit unions see more interchange revenue reductions, some of us may be forced to increase account fees or even stop offering card services. Limiting interchange revenue for a cooperative financial institution essentially picks the member's pocket and gives it to the retailer. Meanwhile, merchants may argue against the burden of collecting tax and paying for payment services unrelated to their revenue, but managing payments is an inherent cost of doing business, akin to other operational expenses, such as snow removal.

The global card payment system operates efficiently and interoperably worldwide. Implementing the requirements suggested in these bills would result in significant and costly changes throughout the payment process. Merchants, particularly small business owners, would face disproportionate expenses compared to larger retailers, further undermining fair competition.

We will continue to call on policymakers to prioritize transparency, auditability, and a system that prevents fraudulent behavior. Any proposal must recognize the complexity of the card payment system and its vital role in the economy. And Connecticut credit unions must act now to protect your members’ privacy.

This legislative outcome will shape the future of America's economy. Join us in protecting consumer privacy and advocating for fair and transparent payment regulations. Together, we can ensure the continued success and sustainability of cooperative financial institutions.