In a new letter sent to Majority Leader Thune, Minority Leader Schumer and the entire Senate today, the American Bankers Association, America’s Credit Unions, Association of Military Banks of America, Bank Policy Institute, Consumer Bankers Association, Defense Credit Union Council, Independent Community Bankers of America, Electronic Payments Coalition, Mid-Size Bank Coalition of America, and National Bankers Association expressed strong opposition to the Durbin-Marshall credit card mandate being attached as an amendment to the GENIUS Act or any other legislative vehicle.
“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.
In the letter, the financial trades emphasized that government intervention in the credit card market would disadvantage small businesses, highlighting a 2024 paper by a University of Miami finance professor that found that almost all of the savings from the Durbin-Marshall bill will accrue to retailers with $500 million or more in annual sales, with little going to small businesses.
“The legislation will do nothing to help small businesses – it will only entrench corporate megastores that already have a stranglehold on the retail market,” the associations said. “Congress should not mandate the reengineering of the entire credit card payments system just to benefit a small group of the largest merchants while causing small businesses to suffer.”
Small community-based financial institutions would also suffer if the Durbin-Marshall bill is enacted, according to the groups.
“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,” the groups wrote. “Federal Reserve data shows that the Durbin Amendment harmed ‘exempted’ community-based institutions. In short, their work is far too essential in supporting small businesses to jeopardize by substituting government price-setting in place of dynamic market competition.”
In the letter, the groups noted that interchange fees help to fund various cardholder benefits, including rewards programs, and investments in critical security tools. Reducing these fees through mandated routing would diminish or eliminate such programs, which American consumers value and similarly oppose the federal government reaching into their wallets. The groups noted that a reduction in rewards and cash back opportunities would significantly harm minority and lower-income consumers, pointing to a study from the International Center for Law and Economics that found that 77% of cardholders with a household income of less than $50,000 have an active rewards card.
“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,” the groups wrote.
The associations concluded their letter by emphasizing that the Durbin-Marshall bill puts our seamless and secure credit card system in jeopardy. According to a study from Texas A&M University, enactment of the bill could—based on 2021 card activity—double the amount of fraud to $20 billion over the next decade.
“The payment card system is convenient, secure, and hassle-free. It protects consumers against fraud, guarantees businesses receive timely payments, funds reward programs like cash back, and powers the American economy, from brick-and-mortar establishments to innovative e-commerce platforms 24 hours a day, seven days a week, 365 days a year,” they said. “The Durbin Marshall Credit Card Mandate, and any other legislation that intervenes in the credit card market, puts the seamlessness, security and value of consumer electronic payments in jeopardy.”