ICBA Policy Resolution: Payment Cards

Position

  • ICBA strongly opposes efforts that, while theoretically intended to prevent unfair, deceptive, or abusive payment card acts or practices, would adversely affect community bank payment card issuers and agents as well as their customers.
  • ICBA strongly opposes efforts to have the government set or limit payment card interchange or other fees, mandate interchange fee disclosure to consumers, or create antitrust exemptions allowing merchants to “negotiate” or “operate” in anti-competitive and collusive ways to the detriment of community banks and their customers. Government intervention should not provide one payment-card type advantages over other payment-card types.
  • ICBA supports consumer choice in payment card offerings through enhanced transparency, education and fairness. However, ICBA opposes any efforts to create a disclosure regime that would have the effect of limiting choices for consumers across the socio-economic spectrum or subjecting community banks to legal and compliance scrutiny.
  • ICBA supports efforts to improve payment card security by: migrating from magnetic strip to chip technology; deploying tokenization and end-to-end transaction encryption; and improving cardholder and merchant authentication technologies.

Background

Consumer Protection

Community banks provide a menu of payment card services 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 a financially-varied customer base.

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 flexibly to changing markets and consumer needs. A well-informed consumer can shop with his or her feet, a free-market factor that benefits community banks that thrive on successful relationship banking.

Congress and the federal agencies should remain mindful that community bank payment card programs need to be profitable. If not, 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 Security

Payment card system stakeholders – networks, merchants, card issuers, and cardholders – are concerned about growing security risks and the need to move to more sophisticated and secure technology such as chip, tokenization, and end-to-end encryption. 

Re-engineering a payments system is not easy task as there are many players that need to collaborate, from the card networks and processors to the bank issuers and merchants. ICBA is participating in this migration by conveying the community bank perspective to all stakeholders and communicating the implications of these changes to community banks and their customers.

Government Intervention

The debit interchange price controls implemented the Durbin Amendment continue to harm community banks, small businesses, and consumers. Community banks are harmed due to greater direct and indirect administrative costs and decreased revenue.

Additionally, merchants are vigorously pursuing various legislative strategies to further shift their payment card interchange costs to consumers, and are likely to continue to push Congress to regulate credit card interchange fees and further weaken payment network rules in the future. ICBA remains actively engaged in the legislative, regulatory and judicial processes and continues to work to roll back the damaging effects of the Durbin Amendment as well as prevent large retailers from further damaging the electronic payments system. 

Staff Contacts: Cary Whaley, Aaron Stetter and Rhonda Thomas-Whitley