Bill to pause Fed debit card rule introduced in Senate

ICBA-advocated legislation directing the Federal Reserve to stop and study its proposed changes to Regulation II before finalizing the rule was introduced in the Senate.

Bill Details: Introduced by Sen. Ted Budd (R-N.C.), the Secure Payments Act of 2024 would require the Fed to pause analysis to measure the impact of the rule on consumers, including access to affordable debit accounts, and the economy. Rep. Blaine Luetkemeyer (R-Mo.) introduced the House version of the bill—H.R. 7531—in March.

ICBA Response: ICBA and other groups expressed support for the bill, citing the Reg II rule’s impact on underserved consumers. In a statement for Budd’s news release on the bill, ICBA President and CEO Rebeca Romero Rainey said ICBA strongly supports the bill given the Fed’s proposal doesn’t use full and complete data from community banks, ignores its potential impact on fraud controls, and could jeopardize access to low-cost and no-cost banking services in the local communities that community banks serve.

Fed Proposal: The Fed proposal would lower the maximum interchange fee that covered debit card issuers may receive for debit card transactions under Reg II. It would adjust the interchange fee cap for debit card issuers with at least $10 billion in assets and establish a regular process for updating the maximum amount every other year based on issuer cost data.

ICBA View: ICBA recently called on the Fed to withdraw the Reg II proposal and met with Fed officials and staff to discuss its concerns. In its comment letter and in a separate joint letter with other groups, ICBA said the proposal would harm consumers, restrict resources used to mitigate fraud, and disproportionately affect smaller issuers.

Previous ICBA Advocacy: ICBA has expressed deep concerns about the impact of the proposal on community banks and previously urged the Fed to reject merchant requests for further changes to Reg II.

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