This week, a coalition of 11 trade associations from the financial services industry expressed strong opposition to proposed legislative measures aimed at expanding federal government control over the U.S. credit card market. The groups, which include prominent organizations such as the American Bankers Association and America's Credit Unions, sent a joint letter to Congress warning that such initiatives could negatively impact consumers, small businesses, and financial institutions.
In their letter, the associations highlighted several concerns about the potential consequences of these legislative efforts. They argued that the current payment card system is "convenient, secure, and hassle-free," benefiting both consumers and businesses by protecting against fraud and ensuring timely payments. The groups cautioned that proposals like the Durbin-Marshall credit card mandates threaten to undermine this system.
The associations also pointed to a study conducted by a University of Miami finance professor in 2024. According to this study, small businesses would be placed at a competitive disadvantage compared to large corporate retailers if the Durbin-Marshall mandates were enacted. The study suggests that savings would primarily benefit retailers with annual sales exceeding $500 million rather than smaller enterprises.
Furthermore, the letter emphasized potential adverse effects on consumers. It noted that popular rewards programs might be diminished or eliminated under new legislation. "The International Center for Law and Economics found that ‘77% of cardholders with a household income of less than $50,000’ have an active rewards card," they wrote. This change could disproportionately affect minority and lower-income consumers who rely on these benefits.
Additionally, there are concerns about whether any cost savings from reduced interchange fees would be passed on to consumers by large retailers. A report from the Congressional Research Service indicated uncertainty regarding this issue and warned of possible increased fraud risks.
Despite these challenges, the trade associations underscored that competition remains robust within the U.S. payments ecosystem. They listed various payment options available to consumers and businesses—ranging from credit cards to real-time payment rails—and argued there is no significant concentration in the credit card market compared to other industries.
In conclusion, while acknowledging room for improvement through technological investment and national data security standards legislation, these financial service groups remain firmly opposed to interventions like those proposed in the Durbin-Marshall mandates.