Durbin Amendment changes would create new, unpredictable risks

Credit unions strongly oppose any expansion of the Durbin Amendment through antirust or any body of law, CUNA and other organizations wrote to Senate Judiciary Committee leadership Monday. The committee is scheduled to conduct a hearing on interchange this week.

The Durbin Amendment requires the Federal Reserve to set a cap on interchange fees that come with debit card transactions. Proposals have been put forth to expand the Durbin Amendment cap to credit cards.  

“Support for any legislation on this topic 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 reads.

CUNA notes that the Durbin Amendment is a “failed government policy” that has led to decreased availability of low-cost banking services, increased consumer prices, and an estimated $250 billion in sales moved away from small businesses into big box and e-commerce retailers.

“Extending highly unsuccessful regulation to a completely different form of payment serves no public policy goal and will irreparably harm consumers, small businesses, and small financial institutions, and create new and unpredictable risks to the safety and soundness of the U.S. payments ecosystem,” the letter reads.

The organizations add Congress should reject any “special interest giveaway” to merchants because:

• 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
• Shifting 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.
• Payment networks and financial institutions will lose the incentive that competition provides to continue to invest billions in security and innovation.
• Consumers will pay the price, while many small issuers will be forced to exit the credit card business altogether.

CUNA issued an action alert Friday calling on credit unions to share information on how members rely on payment cards and the barriers that would arise with any Durbin Amendment changes. More than 1,500 comments have been submitted as of Monday morning.