Regulatory Update Spring 2025

The latest regulatory news pertaining to payments.

The payments industry is constantly in flux, with a number of regulatory bodies affecting the landscape. Here are the latest updates concerned with those regulatory efforts.

financial regulations

House Members Urge Federal Reserve to Withdraw Debit Card Fee Reduction Proposal

In March, Republicans on the House Financial Services Committee wrote to Federal Reserve Board Chairman Jermone Powell, urging him to withdraw a 2023 proposal to reduce the fees that financial institutions with over $10 billion in assets can charge merchants when consumers use debit cards to pay for goods and services. They assert reducing the fees will hurt smaller banks, boost other fees, and undercut fraud prevention.

The current cap, which has been in place since 2011, is 21 cents plus 0.05% of the value of the debit transaction and a one cent fraud prevention fee. The new proposed cap is 14.4 cents plus .04% of the value of the debit transaction and a 1.3 cent fraud prevention fee. The proposal also includes a plan to update fees every other year based on a review of industry data.

The Republicans who sent the letter assert that updating the maximum interchange fee based on average costs for all financial institutions with over $10 billion in assets would likely place smaller debit card issuers at a significant competitive disadvantage since they do not have the efficiencies of scale that larger issuers possess. They also argue this will likely result in banks increasing other fees to make up for the lost debit interchange fee income. Furthermore, they assert that the Federal Reserve failed to adequately consider fraud costs.

Since the proposal was issued in 2023, it has been criticized by merchants and financial institutions.

For more information see this Payments Dive article.

CFPB $8 Credit Card Late Fee Rule Voided by Judge

On April 15th, US District Judge Mark Pittman granted a request to vacate the Consumer Financial Protection Bureau (CFPB)’s credit card late fee rule. The request was made jointly by the CFPB and a coalition of six business and banking groups.

The rule, which was issued in 2024, during the Biden Administration, applied to card issuers with 1 million or more open accounts and capped the late fee they could charge at $8. It also eliminated automatic annual inflation adjustments to the fee. The rule impacted 95% of total outstanding credit card balances. Banking and business groups filed lawsuits to block the rule.

The CFPB, which is now under the leadership appointed by the Trump administration, reversed its stance and said in court filings that it agreed with the plaintiffs that the fee violated the CARD Act by failing to allow card issuers to charge penalty fees reasonable and proportional to violations.

For more information see this article from the New York Times.

Credit Card Competition Act Update

The Credit Card Competition Act (CCCA) has failed to gain any traction since it was first introduced in 2022 by Dick Durbin (D-IL) and co-sponsor Senator Roger Marshall (R-KS). The CCCA seeks to drive down merchant fees by increasing competition among US credit card networks, weakening Visa’s and Mastercard’s market dominance.

It has been reported that Durbin plans to reintroduce the bill this year and is waiting to attach it to a larger piece of legislation.

For more information see this Payments Dive article.

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