Financial industry groups unite to oppose misguided trading regulations

Ahead of a hearing before the Senate Judiciary Committee on credit and debit card interchange fees, the ABA joined a broad coalition of industry groups to communicate to lawmakers the serious flaws in exchange regulations and push back on efforts to expand the Durbin Amendment. Instead, the groups called for the complete repeal of the Durbin Amendment, which they say only resulted in increased costs for consumers and small businesses.

“Study after study has found that the Durbin Amendment has failed to drive down retail prices as marketers had promised and that over time a growing number of smaller banks and credit unions will be subject to its rules because its thresholds were not indexed to inflation,” the groups said in a statement filed for record. “Repealing this law will prevent this damage from continuing to worsen and restore a fully functioning market for checking accounts.”

Trade groups also stressed that the Durbin Amendment should not be extended to apply to credit transactions – and warned that it would have ‘a dramatic effect on consumer protection and services associated with credit card products which are extremely popular with the American public. They also urged the Federal Reserve not to move forward with its proposal to expand Regulation II – Durbin’s implementing regulation – to extend its provisions to virtually all types of debit transactions.

Finally, the groups called on lawmakers to examine how some banking software and payment processors have consolidated and are “now using the Durbin Amendment as a cover to coerce smaller banks and credit unions into using potentially harmful transaction services.” to their continued existence as independent institutions”. Read the joint statement for the record.

In addition to the memorandum statement, the ABA also joined seven other financial industry groups in a letter to Judiciary Committee Chairman Dick Durbin (D-Ill.) and Ranking Member Chuck Grassley (R- Iowa) vigorously pushing back on expanding the law. .

“Legislation in this space is unnecessary as 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 said. “For example, retailers have been quick to offer Buy Now Pay Later products for which they pay significantly more (up to 6%) than for payment cards. The free market works, and suggestions that government intervention is necessary do not hold up to scrutiny.

In another letter to 51 state bankers’ associations, the ABA told Durbin and Grassley that more than a decade after the Durbin Amendment took effect, “it is clear that the interchange and routing mandates have hurt consumers, small businesses, and financial institutions by reducing choice, increasing costs, and reducing access to credit Congress should act quickly to repeal the Durbin Amendment , and not extend its scope.

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