The American Bankers Association, America's Credit Unions, and several other financial associations have collectively urged Congress to reject new mandates on credit card regulations. In a letter addressed to the Senate Judiciary Committee, these groups expressed their opposition to the Credit Card Competition Act (S. 1838 Durbin-Marshall bill) and any further expansion of the Durbin amendment.
The letter was sent ahead of a Senate Judiciary Committee hearing scheduled for tomorrow. The associations voiced their "deep disappointment" with the committee's decision to hold this hearing during the lame-duck session of Congress without including testimony from community banks or credit unions affected by the proposal.
"The negative repercussions of the Durbin amendment are still being felt nearly 15 years after it was signed into law," stated the groups. They referenced a 2022 Government Accountability Office report which suggested that had the Durbin amendment not been implemented, a significant percentage of noninterest checking accounts would have remained free. Furthermore, research indicated that after its implementation, most merchants either increased prices or maintained them despite promises of passing savings onto consumers.
The associations warned that regulating credit card interchange fees could result in similar consumer harm. Recent studies estimate that expanding routing requirements under the Durbin-Marshall bill could increase checking account service costs by $1.3 to $2 billion annually, disproportionately affecting low-balance consumers. The proposed legislation might also lead to increased fraud risks, reduced rewards programs, and limited credit allocation for individuals and small businesses.
They emphasized that such mandates would affect all card-issuing financial institutions nationwide, including those purportedly exempt like community banks and credit unions. "In reality, a change this monumental cannot be walled off by some legislative carve out," they argued.
The letter highlighted survey data showing American consumers' appreciation for their payment cards and resistance to federal intervention in personal finances. It noted that "the U.S. payments ecosystem is rife with competition" with various payment options available.
Lawmakers were urged not to jeopardize the current payment card system which is described as "convenient, secure and hassle-free." The associations stressed that this system protects against fraud, ensures timely business payments, funds reward programs like cashback, and supports both traditional and e-commerce platforms around-the-clock.
"The Durbin-Marshall bill, and any other legislation that intervenes in the credit card market, puts all that in jeopardy," concluded the letter.