Rob Nichols Comment Letter on Regulation II Proposal

Thanks to your commitment and support, Bank On-certified accounts have improved the financial health of millions of individuals and families across the country by providing low-fee banking services. We want to call your attention to a major pending regulatory change that will fundamentally impair the sustainability of affordable deposit account products. If enacted, this Federal Reserve proposal to lower Durbin Amendment debit card interchange caps will subsidize the largest global retailers at the expense of bank account customers. We invite you to join our efforts to oppose this change.

This “Regulation II” proposal by the Federal Reserve threatens to undo the good work we have done together. In 2021, the unbanked rate fell to 4.5% – a record low – and 5 million unbanked households were newly banked, a testament to banks and credit unions offering Bank On-certified accounts. Because Bank On accounts have very low monthly and almost no ancillary fees, these accounts are largely supported through debit card activity – which in itself is an indication that customers are enjoying the benefits of being banked and no longer need to pay high fees for products like money orders or check cashing services.

But our industry’s collective progress in bringing customers into safe, affordable, regulated accounts is at risk. Among the changes being proposed by the Fed: an almost 30% decrease in the debit interchange fee that covered banks and credit unions may receive for each debit transaction and the introduction of an automatic biennial review of these fee caps without accompanying public comment each time the caps are reviewed by the Federal Reserve. Ultimately, this sustained agenda to weaken the economic viability of debit card products jeopardizes consumers' ability to access safe and affordable banking products.

Unless we take action to ensure that the Federal Reserve understands that consumers are stakeholders worthy of consideration, this rulemaking will further imperil the economics that enable financial institutions of all sizes to offer Bank On-certified accounts. We are concerned that this regulatory overreach will jeopardize the economic sustainability of Bank On accounts just as we are reaching nationwide availability. We are writing to ask you to join other financial institutions in conveying to the Federal Reserve Board the risks posed by this proposal.

Download the comment letter to read the full text.