WASHINGTON — The Defense Credit Union Council has raised concerns about a New Jersey credit card routing bill, warning that changes in processing costs could affect fraud protection, member assistance and other financial services used by military families.
In an Oct. 3 letter to Assembly Consumer Affairs Committee Chairman William B. Sampson IV, DCUC linked those services to the financial needs of service members, veterans and their families during deployments, relocations and transitions to civilian life. Committee members received copies of the letter.
“Military families rely on financial services that remain dependable through deployments, relocations, and the transition to civilian life,” said Anthony Hernandez, DCUC’s president and CEO. “Defense credit unions serve those families as member-owned institutions. Our focus is the person who needs a fraudulent charge resolved, access to an account from overseas, or help keeping the household finances on track.”
The bill, A1921, would prohibit payment systems from limiting credit card processing to a single network or affiliated networks and from restricting merchants’ routing choices, according to DCUC. Although the legislation identifies greater competition and lower consumer costs as objectives, it would not require merchants to pass processing savings to customers, the council said.
Processing Costs And Member Services
DCUC said credit unions, as member-owned, not-for-profit cooperatives, return earnings to members through lower loan rates, better savings rates and reduced fees. Fraud prevention, cybersecurity, cardholder assistance and rewards require continuing investment, the council said.
The New Jersey letter builds on a June 22 letter to the House Financial Services Committee describing how interchange revenue helps fund those services, including assistance during deployments and military moves.
“Interchange supports the work behind the card—fraud response, secure payments, and assistance when something goes wrong,” said Jason Stverak, DCUC’s chief advocacy officer. “Our letter connects those operating costs to the services military families use. A merchant’s processing savings and a military household’s savings are not the same calculation. For veteran-owned businesses, payment reliability and acceptance costs also belong in that discussion.”
Federal And State Charter Concerns
The letter also addresses federal preemption and potential differences in the legislation’s effects on federally and state-chartered credit unions.
According to DCUC, a June National Credit Union Administration rule states the agency’s position that conflicting state restrictions on federal credit unions’ interchange fees are preempted. That rule does not automatically extend the same protection to state-chartered institutions, and A1921’s routing provisions require a separate legal analysis, the council said.
DCUC warned that state-chartered credit unions could face a competitive disadvantage if they must absorb processing or compliance expenses that federally chartered competitors avoid. A lasting disparity could influence charter-conversion decisions and put pressure on the state side of the dual-charter system, the council said.
In a Sept. 17 letter to NCUA, DCUC requested a separate assessment of protections and available options for state-chartered credit unions.
“This is about operating costs and the resources available for members—not simply which regulator supervises an institution,” Stverak said. “That is why our letter addresses both federal and state-chartered credit unions and the military and veteran communities they serve.”
New Jersey’s Military Communities
The letter highlighted New Jersey’s military presence, including Joint Base McGuire-Dix-Lakehurst, Picatinny Arsenal, Naval Weapons Station Earle, Atlantic City Air National Guard Base, the National Guard Training Center at Sea Girt, Warren Grove Range and Lawrenceville.
It also cited Coast Guard facilities in Cape May, Atlantic City and along the shore, as well as National Guard armories and Reserve centers statewide. Credit unions serve those communities through on-base services, nearby branches and digital banking, DCUC said.
DCUC’s New Jersey letter follows correspondence in Colorado, Pennsylvania and New York. Its Colorado letters, including a May 7 letter to Gov. Jared Polis, addressed costs reaching credit unions through networks and processors and their connection to military member services. Colorado’s SB26-134 addressed interchange on taxes, while New Jersey’s A1921 addresses credit card routing, DCUC said.
DCUC asked that its letter be included in the committee’s record and offered to meet with lawmakers and leaders of federally and state-chartered credit unions to discuss operating costs and services used by military members.
