CBA, Financial Trades Call on Fed to Reject Requests for Changes to Debit Card Interchange Fees

October 23, 2023

In a new letter sent to the Federal Reserve Board of Governors, the Consumer Bankers Association, American Bankers Association, American Association of Credit Union Leagues, Credit Union National Association, Electronic Payments Coalition, Independent Community Bankers of America, Mid-Size Banks Coalition of America, National Association of Federally-Insured Credit Unions and National Bankers Association urged the Fed to reject merchant requests for further changes to Regulation II governing debit card interchange fees. The coalition includes organizations representing the vast majority of federally-regulated financial institutions across the country, including community banks, credit unions, and institutions serving the military community concerned about the negative impact Reg II changes could have on millions of deposit account holders.

Among other actions, the groups call on the Fed to share more details on the potential revisions before the Board of Governors meet to discuss the rule, to collect and publish comprehensive data on the costs of Reg II on regulated entities and the consumers, and they request the opportunity to meet with the Board of Governors and rebut assertions made by merchants, which are “riddled with errors, misleading statements, and false comparisons that appear designed to deceive” and ignore the very real impact Regulation II has already had on consumers across the country.

“As in the merchant groups’ litigation against the Federal Reserve on Regulation II, there is consistent cherry-picking of facts and omission of ‘inconvenient evidence’ that contradicts their advocacy efforts,” the groups wrote.  “We urge the Board not to be misled. Contrary to merchant talking points, Regulation II has caused significant real-world economic harm to our members and their customers — and its recent expansion by the Board is compounding that harm. The Durbin Amendment’s ‘exemption’ of smaller financial institutions has proven to be largely illusory, as the Federal Reserve’s own data shows that regulatory thresholds in the interchange market do not insulate smaller issuers from harm.”

The groups expressed disappointment that the Federal Reserve has so far refused to acknowledge that community financial institutions are facing rising costs and falling revenues because of existing Regulation II rules.

“Adding to this disappointment is the Board’s willingness to acquiesce to merchant requests regarding practices they consider to be ‘unfair,’” according to the groups. “While we acknowledge and appreciate the important role that merchants play in the payments ecosystem, ensuring the soundness and sustainability of all stakeholders, including debit card issuers of all sizes — including community banks and credit unions, many of which are already facing rising debit costs and declining interchange revenues — is, in our view, a more important policy imperative for a financial regulator. The manipulation of card-not-present transactions is introducing fraud risks and creating operational problems for debit card issuers. The cumulative and underappreciated result of these developments is a reduction in consumer access to affordable core financial products and higher costs.”

In the letter, the associations request the opportunity to meet with the Board of Governors and rebut assertions made by merchants prior to any votes on this issue.

“While we believe that Federal Reserve economists are savvy enough to see through the distortions, misrepresentations, and (in some cases) outright falsehoods on which these trade associations base many of their arguments, we nonetheless respectfully request the opportunity to meet with you to correct the record prior to the Board’s scheduled open meeting on October 25, 2023. Neither the flawed petition nor the subsequent and similarly flawed meeting materials should form the basis for the Board’s posture on these issues.”

In closing, the letter highlights that the Board is under no obligation to act on the request of the merchants and that caution should be advised given wide-reaching impact on consumer checking accounts.

“This is not merely a question about routing or interchange, and it does not only affect thousands of financial institutions. Hundreds of millions of consumer checking accounts are inexorably linked to debit card processing and as the Supreme Court has found, cardholder interests matter too.”

Read the full letter.

About the Consumer Bankers Association

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly trillion in consumer loans and provide billion in small business loans annually. Follow us on Twitter @consumerbankers.

About the American Bankers Association

The American Bankers Association is the voice of the nation’s $23.5 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2.1 million people, safeguard $18.6 trillion in deposits and extend $12.3 trillion in loans.

About the American Association of Credit Union Leagues

The American Association of Credit Union Leagues (AACUL) is the national association for the state and regional credit union leagues/associations throughout the United States. AACUL’s mission is to cultivate the success of individual leagues as well as the collective League System by supporting league efforts to advocate, communicate, collaborate and influence policy on behalf of credit unions nationwide. We partner with the Credit Union National Association (CUNA) to foster the CUNA-League System relationship and the prosperity of the credit union movement.

About CUNA

Credit Union National Association (CUNA) advocates on behalf of America’s credit unions, which are owned by more than 137 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit

About the Electronic Payments Coalition

We are the credit unions, community banks, payment card networks, and institutions who support the backbone of our economic system: electronic payments. 

Click HERE to learn more.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA 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.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at

About The Mid-Size Bank Coalition of America

Founded in 2010, the MBCA is a distinct and singularly focused "self-help" community for America's mid-size banks. The MBCA provides a forum to facilitate the utilization of information, market developments and best practices tailored toward mid-size banks. Our entrepreneurial culture also allows for consortium opportunities to share research and explore commercial ventures, resulting in a more resilient and competitive banking landscape that helps reduce the cost of banking services to consumers.


The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to or @NAFCU on Twitter.

About National Bankers Association

Founded in 1927, the National Bankers Association is the voice for the nation's Minority Depository Institutions (MDIs). No other trade association is focused solely on the priorities, federal advocacy, and representation of minority-owned and -operated banks. Members include Black, Hispanic, Asian, Pacific Islander, Native American, and women-owned and -operated banks. MDIs are located across 32 states and the District of Columbia, Puerto Rico, and Guam. For more information, visit