Credit & Debit Cards
Community banks provide debit and prepaid cards to their customers to execute the exchange of monetary value. Community banks strive to balance the mandate to maintain transparent, safe, sound and profitable payment card programs with the needs of financially varied customer bases.
Congress and the federal agencies must exercise caution in ensuring that efforts to establish and maintain an environment protecting consumers from unfair, deceptive, or abusive acts or practices does not unnecessarily impede community banks’ ability to respond to changing markets and consumer needs. A well-informed consumer has the ability to shop with his or her feet, a free-market factor that benefits community banks that thrive on successful relationship banking.
National interest rates and fee caps would reduce competition as small issuers without scale may exit the business if they cannot compete with larger scale issuers on price alone. Efforts to place caps on rates and fees would also force small issuers to cut off credit to those most in need, and would likely raise the cost of credit to all other borrowers.
Congress and the federal agencies should remain mindful that community bank payment card programs need to be profitable. If this balance is not maintained, community banks will give greater consideration to discontinuing various products, particularly credit cards, which would result in further consolidation of the industry and fewer choices for consumers. Policies that generate more compliance costs for community banks will not benefit consumers.
Payment card system stakeholders – networks, merchants, card issuers and cardholders – are concerned about the growing security risks and the need to move to more sophisticated and secure technology such as chip and PIN. But re-engineering a payments system is not easy as there are many players that need to collaborate, from the card networks and processors to the bank issuers and merchants. ICBA will participate actively in this migration by conveying the community bank perspective to all stakeholders and communicating the implications of this migration to community banks and their customers.
Staff Contact: Viveca Ware