The American Bankers Association and other financial trade groups have voiced strong opposition to the Durbin-Marshall credit card mandate being attached as an amendment to the GENIUS Act. In a letter addressed to Senate leaders, including Majority Leader Thune and Minority Leader Schumer, the associations expressed concerns about potential negative impacts on consumers, small businesses, and financial institutions.
"The Durbin Marshall Credit Card Mandate, a poison pill amendment that has not been properly considered through the regular legislative process, would harm consumers, small businesses, and financial institutions alike by reducing choice, increasing costs and fraud risks, and creating economic challenges for small financial institutions," the groups wrote.
The letter highlighted research indicating that savings from the Durbin-Marshall bill would largely benefit retailers with over $500 million in annual sales rather than small businesses. The associations argued that such legislation could entrench corporate megastores while disadvantaging smaller enterprises.
Small community-based financial institutions could also face challenges if the bill is enacted. The groups noted that interchange price controls might increase profits for large retailers but impair smaller institutions' ability to offer competitive products due to decreased revenue for lending and data security.
"As we saw with the Durbin Amendment, interchange price controls would increase profits of corporate megastores while impairing small financial institutions’ ability to provide competitive products and services to consumers and small businesses by decreasing revenue used for lending and data security while increasing operational costs," they wrote.
Interchange fees are used to fund various cardholder benefits like rewards programs. The letter warned that mandated routing reductions could diminish these programs, impacting minority and lower-income consumers who value them. A study cited by the International Center for Law and Economics found that 77% of cardholders with household incomes under $50,000 have active rewards cards.
"Despite false claims to the contrary, the bill would take away rewards options from lower-income Americans who value those rewards benefits, not just wealthy individuals," they wrote.
The associations concluded by emphasizing potential risks to the credit card system's security if the Durbin-Marshall bill passes. A Texas A&M University study suggested enactment could double fraud amounts based on 2021 activity.
"The payment card system is convenient, secure, and hassle-free. It protects consumers against fraud...and powers the American economy...The Durbin Marshall Credit Card Mandate...puts the seamlessness, security and value of consumer electronic payments in jeopardy," they said.