This week, 11 trade associations from the financial services industry, including the American Bankers Association and America's Credit Unions, expressed their opposition to proposed credit card mandates in a joint letter to Congress. The associations warned that legislative efforts to expand federal intervention in the U.S. credit card market could negatively impact consumers, small businesses, and financial institutions.
"The payment card system is convenient, secure, and hassle-free," the groups said. "It protects consumers against fraud, guarantees businesses receive timely payments, funds reward programs like cash back, and powers the American economy." They argued that the Durbin-Marshall credit card mandates would jeopardize these benefits.
The letter emphasized that such proposals could limit consumer choice, increase fraud risks, and create economic challenges for smaller financial institutions. A 2024 paper by a University of Miami finance professor suggested that small businesses might face competitive disadvantages if these mandates were enacted.
Additionally, the groups highlighted potential losses for consumers in terms of rewards programs. "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 noted. The proposed mandates could remove valuable rewards options from lower-income Americans.
Concerns were also raised about whether corporate megastores would pass savings on to consumers. "The Congressional Research Service released a report stating it is not clear whether retailers would pass interchange savings on to consumers," according to the letter.
The associations underscored the competitive nature of the U.S. payments ecosystem, citing various payment options available to businesses and individuals. They argued there is no significant concentration in the credit card market compared to other industries.
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