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Several financial-related trade organizations sent a letter this week to lawmakers in Washington, D.C. to oppose any expansion of the Durbin Amendment to include credit cards.
Eight financial trade organizations, including NAFCU and CUNA, sent the letter to leaders of the House Financial Services Committee and Senate Banking, Housing and Urban Affairs Committee. In it, the organizations stated that expanding the cap on interchange fees from debit cards to credit cards "would undermine the overall health and security of the U.S. payments ecosystem and have significant negative implications for consumers and small businesses at a time when the U.S. economy is just starting to recover from a global pandemic."
The letter continued, "Not only would this be harmful public policy, but the merchant lobby is choosing to ignore the fundamental differences between debit cards and credit cards, which operate completely differently. For the reasons discussed below, we call on Congress to reject this special interest giveaway."
Retail organizations sent a letter to support the expansion of the Durbin Amendment cap to lawmakers in June.
In the letter signed by NAFCU and CUNA, the organizations said, "Already, the COVID-19 pandemic and resulting regulations created a $250 billion wealth transfer from small businesses to big-box retailers — and an expansion of the Durbin Amendment would only further widen that gap."
According to a statement from NAFCU, under the Dodd-Frank Act, the Durbin Amendment directed the Fed to regulate debit interchange fees. "Proponents of the Durbin amendment claimed that consumers would see lower prices. However, NAFCU has previously argued that the Durbin Amendment should be abandoned as it was supposed to benefit consumers with lower prices and there is no evidence that merchants have passed along their savings to consumers in the form of price cuts," NAFCU stated.
In a blog post from CUNA, it pointed out the following items mentioned in the group letter:
- 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.
- This effort by merchant groups to shift billions of dollars of consumer credit card spending to less secure, less innovative and higher-risk transactions would make America's payment system worse and put consumers in a vulnerable position.
- Having the government take away consumers' choice to pick their credit card, and give it to large merchants, is fundamentally wrong.
- The Durbin Amendment is a failed government policy, leading to consumer prices increasing, far fewer community banks and credit unions across the country, and several small debit networks going out of business.
- The merchant proposal would reduce availability of credit to U.S. consumers and small businesses.
- Congress should not require the reengineering of the entire payments system just to benefit a small group of the largest retailers while causing small businesses to suffer.
The full letter can be read or downloaded here.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
