A group of financial industry associations are urging the U.S. Senate not to include the Credit Card Competition Act as an amendment to the GENIUS Act stablecoin bill.
The Credit Card Competition Act would require credit card issuers to offer merchants at least two credit card networks on which to process transactions, as a way to spur more competition. The bill’s sponsors. Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) are reportedly looking to include it in the GENIUS Act.
“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 a letter sent to all U.S. senators.
The letter was signed by 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.
The financial trade organizations emphasized that government intervention in the credit card market would disadvantage 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 stated. “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.”
The financial groups noted that interchange fees help to fund various cardholder benefits, including rewards programs, and investments in security tools. Reducing the fees would diminish or eliminate these programs, they said.
“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.”
The associations added that the current payment card system is convenient, secure, and it protects consumers against fraud, among other advantages.
“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,” they concluded.