ABA and 52 State Bankers Associations to Senate: Durbin-Marshall Credit Card Mandate Should Not be Attached to GENIUS Act

In a new letter to the Senate today, the American Bankers Association and 52 state bankers associations representing banks of every size expressed strong opposition to the Durbin-Marshall credit card mandate being attached as an amendment to the GENIUS Act or any other legislative vehicle. The letter builds upon the chorus of strong and united industry opposition to the amendment, including a joint trades letter ABA, 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 sent to the Senate this afternoon.

“This poison pill amendment, which expands on the misguided routing requirements imposed by the Durbin amendment to credit cards issued in the U.S., would harm consumers, small businesses, and banks alike by reducing card choice, increasing fraud risks, reducing rewards, increasing the cost of allocating credit to borrowers, and creating economic challenges for smaller financial institutions,” ABA and the 52 state associations wrote. 

The state bankers associations note that 15 years of hindsight make it clear the original Durbin amendment has harmed consumers, citing a 2022 report from the Government Accountability Office that found that if the Durbin amendment “had not been implemented, 65 percent of noninterest checking accounts offered by covered banks would have been free.”

“Expanding this failed policy to impose new regulations on credit card interchange fees will lead to similar consumer harm,” the associations wrote. “This legislation would limit credit access and upend credit card rewards programs, which are funded through interchange fees, with the worst effects being felt by minority and lower-income consumers.”

Not only will consumers lose their valuable rewards programs, but the Durbin-Marshall bill would impact the U.S. economy as well, the groups noted. Recent economic analysis from Oxford Economics Research, an independent advisory firm, found that the Durbin-Marshall bill could cost the U.S. economy $228 billion and 156,000 jobs by eliminating rewards programs supporting travel and tourism nationwide. Additionally, the Congressional Research Service released a report stating, “it is not clear whether retailers would pass interchange savings on to consumers” and consumers “might face higher incidences of fraud.” The Federal Reserve Bank of Richmond has observed that 98% of merchants raised prices or kept them the same post-implementation of the original Durbin amendment. Strong evidence demonstrates that consumers would not see any benefits from a Durbin expansion and would actually be harmed should this legislation become law. 

The groups also outlined why community banks will suffer if the Durbin-Marshall bill is enacted.

“Despite the specious claims that smaller banks are ‘exempted’ from the Durbin-Marshall bill, analysis of the impact of the original Durbin amendment shows that these exemptions are ineffective,” the groups wrote. “According to Federal Reserve data, community banks suffered a 30% decrease in their interchange revenue after the Durbin amendment was adopted and ‘exempted’ community banks will face the same situation again should credit card routing mandates become law as these new mandates will distort the market and decrease revenue used for lending in their respective communities. It is abundantly clear that the bill benefits corporate megastores over consumers, small businesses, and community banks.”

The Durbin-Marshall bill will also lead to an increase in fraudulent card activity. According to a study from Texas A&M University, enactment of the Durbin-Marshall bill could—based on 2021 card activity—double the amount of fraud to $20 billion over the next decade. 

“This would be particularly detrimental to consumers and small businesses,” according to the letter. “Some small business owners have highlighted the fact that security breaches would ‘make credit cards less secure to process,’ exposing consumers to more instances of fraud and data breaches. The Durbin-Marshall bill would also reduce the amount of revenue that banks use to ‘invest in fraud prevention and other credit card security features’ to protect small businesses and consumers across the country. Without investment in the sophisticated tools used to combat credit card fraud, payments become less secure for both consumers and small businesses.”

For all the above reasons, the groups “urge policymakers to oppose any efforts to attach the Durbin-Marshall bill to the GENIUS Act because of its harmful effects on consumers, small businesses, and banks of all sizes.”  

Read the full letter.