Several financial industry groups, including the Independent Community Bankers of America (ICBA) are warning federal lawmakers not to intervene in the U.S. credit card market.
The groups cited proposals like the Credit Card Expansion Act, which seeks to require credit card issuers to offer a minimum of two networks for merchants processing transactions, or the Durbin amendment, which would reduce interchange fees.
The financial groups say they would reduce consumer choice, increase costs and fraud risks, and create economic challenges for smaller financial institutions.
“The payment card system is convenient, secure, and hassle-free,” the groups wrote in a letter to Congressional lawmakers. “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. The Durbin-Marshall bill, and any other legislation that intervenes in the credit card market, puts all that in jeopardy.”
The letter was signed by ICBA along with the American Bankers Association, America’s Credit Unions, Association of Military Banks of America, Bank Policy Institute, Consumer Bankers Association, Defense Credit Union Council, Electronic Payments Coalition, Mid-Size Bank Coalition of America, and National Bankers Association.
The associations said that government intervention in the credit card market would disadvantage small businesses, citing a 2024 paper by a University of Miami finance professor who said small businesses would be put at a competitive disadvantage to large corporate megastores if the Credit Card Competition Act is passed.
The groups also noted that consumers would lose access to rewards programs and the reduction in rewards and cash back opportunities would significantly harm minority and lower-income consumers.
“The International Center for Law and Economics found that ‘77% of cardholders with a household income of less than $50,000’ have an active rewards card. The Durbin-Marshall bill would take away rewards options from lower-income Americans who value those rewards benefits, not just wealthy individuals,” the associations wrote.
Finally, the associations stated that the U.S. payments ecosystem is rife with competition and choice.
“Credit cards, debit cards, buy-now-pay-later, checks, cash, ACH transactions, wire transfers, and real time payment rails provide businesses and individuals with a multitude of payment options. There is no evidence of significant concentration in the credit card market. In fact, the market for consumer cards concentration is far below the DOJ threshold and is far less concentrated than other industries,” they added.