A recent News for the States article looks at a Delaware bill that would exclude tips from credit and debit card interchange fees. While House Bill 315 is positioned as a way to protect service workers’ earnings, the Association and Delaware credit unions caution that interchange revenue is essential to sustaining card programs because it helps offset fraud losses, fund rewards, and preserve affordable access to credit.

In committee testimony highlighted in the article, Del-One Federal Credit Union CEO Dan McCarthy emphasized the real-world impact of fraud on institutions. He noted that his credit union has absorbed $2.4 million in fraudulent charges over the past two years, fully reimbursing affected members. While some losses can be recovered from merchants, that is not always possible, leaving credit unions to bear the cost.

McCarthy warned that reducing interchange revenue could force difficult tradeoffs,
“If this bill becomes law, credit unions would have to increase other sources of income, such as raising interest rates, or reducing expenses. That could mean limiting access to credit cards to the riskiest members, and that could negatively impact our financial inclusion efforts.”

Beyond revenue impacts, carving out tips from interchange could introduce significant operational complexity in payment processing, requiring system changes across networks, processors, and institutions.

The bill has advanced out of committee but has not yet reached the House floor. The Association continues to work closely with Delaware credit unions and coalition partners to engage with legislators and coordinate advocacy efforts to highlight the unintended consequences of the legislation.