Rep. Randy Neugebauer’s bill would reverse costly policy
Washington, D.C. (June 15, 2016)—The Independent Community Bankers of America® (ICBA) today endorsed new legislation restoring market-based pricing on the rates merchants pay when their customers use debit cards. H.R. 5465, introduced by Rep. Randy Neugebauer (R-Texas), would overturn government price controls on debit card interchange rates to mitigate the negative impact on merchant customers and local community banks.
“ICBA and the nation’s community bankers strongly support Chairman Neugebauer’s bill to end federal price controls on debit card interchange, which have so far transferred an estimated $36 billion to merchants,” ICBA President and CEO Camden R. Fine said. “By favoring powerful big-box retailers to the detriment of customers and Main Street financial institutions, government price-setting has once again proven itself a failed policy.”
Congress passed the controversial rate-fixing policy in 2010 despite vigorous opposition from ICBA and community banks. While the large retailers that advocated the change promised it would lead to lower prices for their customers, multiple studies show they haven’t passed on an estimated $8 billion annual windfall to customers. Neugebauer’s bill would repeal price-setting on debit card interchange, advancing a key plank in House Financial Services Committee Chairman Jeb Hensarling’s (R-Texas) Financial CHOICE Act.
Further, government intervention has limited consumer choice as large retailers have begun steering their customers to more profitable payment networks. Mega-retailers such as Walmart and Kroger have begun requiring customers to process card transactions with a PIN, instead of their signature—overriding consumer preferences while profiting at the expense of local community banks and their customers.
ICBA looks forward to working with Chairmen Neugebauer and Hensarling and other members of Congress to reverse the interchange policy’s harmful impact on consumers, community banks and the electronic payments system.
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.