History proves consumers don’t benefit from government regulated mandates. After the 2010 Durbin Amendment, the Richmond Fed found 98% of merchants didn’t lower prices–20% even raised them. Debit rewards were eliminated and incidents of fraud increased.
Interchange currently funds $60 billion in annual consumer rewards. Mandates would gut this funding, stripping everyday consumers of the benefits they rely on for groceries, gas, travel, and household expenses. A PPI study found two-thirds of low- to moderate-income cardholders own a rewards card, often using rewards for daily essentials.
These mandates benefit corporate megastores, not Main Street businesses. Small businesses would lose access to critical benefits, face additional expenses and increased costs.
A Congressional Research Service report concluded small businesses likely wouldn’t benefit from the mandates. Meanwhile, the top 100 retailers would pocket $3 billion, with over one-third of it going to Walmart, Amazon, Costco, Kroger, and Home Depot.
Mandates would also shift credit fraud liability onto businesses. While corporate megastores could absorb these additional costs without issue, small businesses would be forced to purchase additional insurance to protect against data breaches and fraud, risks currently covered through interchange, or face bankruptcy when incidents occur.
Durbin’s 2010 debit card mandates resulted in similar outcomes: corporate megastores profited billions, while small businesses and consumers paid the costs.
Despite Durbin 1.0 claims to protect these small financial institutions through so-called “small bank exemptions,” small financial institutions lost 10-30% of interchange revenue despite being "exempt." These exemptions failed and they will fail again under the Durbin-Marshall Mandates.
That's exactly why credit unions and community banks in all 50 states strongly oppose these new mandates.
Co-branded airline cards help generate $23 billion in travel-related economic activity, supporting 183,000 jobs. If mandates pass, Oxford Economics projects $227 billion in lost economic activity and 156,000 jobs at risk–especially devastating for tourism-heavy regions.
