Financial Industry Groups Unite to Oppose Flawed Interchange Regulations

Ahead of a hearing in the Senate Judiciary Committee on credit and debit card interchange costs, ABA accompanied a broad union of market groups to interact to legislators the major defects of interchange guidelines and press back versus efforts to broaden the Durbin modification. Instead, the groups required a complete repeal of the Durbin modification, which they stated has actually just resulted in greater expenses for customers and small companies.

“Study after study has found that the Durbin Amendment has failed to lower retail prices as merchants promised and as time goes on, an increasing number of smaller banks and credit unions will be subject to its rules because its thresholds weren’t indexed for inflation,” the groups stated in a declaration sent for the record. “Repealing this law will prevent these harms from continuing to mount and will restore a fully functioning market for checking accounts.”

The trade groups likewise stressed that the Durbin modification must not be reached use to credit deals—and cautioned that doing so would have “a dramatic effect on consumer protections and services associated with the credit card products that are overwhelmingly popular with the American public.” They likewise prompted the Federal Reserve to stagnate ahead with its proposition to extend Regulation II—Durbin’s executing policy—to broaden its arrangements to essentially any kind of debit deal.

Finally, the groups contacted legislators to analyze how particular bank software application and payments processors have actually combined and are now “using the Durbin amendment as cover to coerce small banks and credit unions into using transaction services that may harm their sustainability as independent institutions.” Read the joint declaration for the record.

In addition to the declaration for the record, ABA likewise accompanied 7 other monetary market groups in a letter to Judiciary Committee Chairman Dick Durbin (D-Ill.) and Ranking Member Chuck Grassley (R-Iowa) pressing back intensely versus broadening the law.

“Legislation in this space is unnecessary because the payments industry is more competitive than ever, with new players entering all the time, giving consumers and merchants a range of options,” the groups stated. “For example, retailers have rushed to offer Buy Now Pay Later products for which they pay  substantially more (as much as 6 percent) than for payment cards. The free market is working, and suggestions that government intervention is needed do not stand up to scrutiny.”

In another letter with 51 state lenders associations, ABA informed Durbin and Grassley that more than a years after the Durbin modification worked, “it is clear that interchange caps and routing mandates have hurt consumers, small businesses, and financial institutions by reducing choice, increasing costs, and reducing access to credit. Congress should act swiftly to repeal the Durbin Amendment, not expand its scope.”


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