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Budd Introduces Bill to Force Federal Reserve to Pause Debit Card Proposal That Hurts Consumers

Washington, D.C. — Today, Senator Ted Budd (R-NC) introduced the Secure Payments Act, which would require the Federal Reserve to pause its Regulation II Debit Card Interchange Fee proposal until it completes a full quantitative impact study of its effects on consumer costs and the wider economy.


Regulation II was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 and imposed by the Federal Reserve. The regulation placed arbitrary caps on the price retailers pay for debit card services. In October 2023, the Federal Reserve issued a new proposal to further lower debit card interchange caps.

Since implementation of debit interchange price caps in 2011: 

  • The percentage of banks and credit unions offering free checking accounts declined from 60 percent to less than 20 percent.
  • Checking account fees for regulated institutions more than doubled.
  • According to a 2017 FDIC Survey of Unbanked and Underbanked Households,  nearly 30% of respondents who previously had accounts reported that they were forced to close them because fees were too high or unpredictable.

The bill is also sponsored by Senators Thom Tillis (R-NC), Steve Daines (R-MT), Bill Hagerty (R-TN), and Katie Britt (R-AL).

The bill is supported by

  • American Bankers Association
  • America’s Credit Unions
  • Bank Policy Institute
  • Carolinas Credit Union League
  • Consumer Bankers Association
  • International Bancshares Corporation
  • Independent Community Bankers of America
  • North Carolina Bankers Association

The House version of the bill was introduced by Rep. Blaine Luetkemeyer (R-MO).

Senator Budd said in a statement:

“The Federal Reserve’s Regulation II is a misguided policy that hurts everyday North Carolinians, especially those in minority communities. Indiscriminately imposing government price caps on debit card services makes it harder for people to open bank accounts and forces banks to end popular perks like free checking. Before the Federal Reserve moves forward with this proposal, they must take into account the damage it will do to consumers across the country.”

America’s Credit Unions President and CEO Jim Nussle said:

“Credit unions need access to as many resources as possible to provide critical services in rural and underserved communities across America, and we’ve already seen that debit interchange restrictions limit those resources and ultimately hurt consumers. The Federal Reserve’s proposal to reform all three components of the Regulation II interchange fee cap deserves a study to fully understand its potential consequences. Senator Budd has been a friend in this fight and we thank him for introducing a commonsense piece of legislation that will bring real time data and evidence to the Federal Reserve’s effort. America’s Credit Unions looks forward to supporting policies that allow people to live their best financial lives.”

Bank Policy Institute President and CEO Greg Baer said:

“We support this legislation unequivocally. The Fed’s proposal will undermine the availability of low-cost deposit accounts, directly harming low- and-moderate-income consumers. Regulators need to take the time to thoroughly consider the trade-offs involved.”

American Bankers Association President and CEO Rob Nichols said:

“Overwhelmingly, members of the public – ranging from community banks and civil rights activists to economists and everyday Americans – have spoken out about the real harms the Fed’s proposal to drastically cut debit interchange fees would cause banks, their customers and communities, particularly underserved and lower-income Americans. The Fed’s Regulation II proposal would deal a significant blow to low-cost Bank On accounts and other successful financial inclusion efforts, and the Secure Payments Act would help prevent this harmful mistake. We appreciate Senator Budd’s leadership on this important legislation to require the Fed to stop and fully examine the implications of this misguided rule.”

Consumer Bankers Association President and CEO Lindsey Johnson said:

“In recent months, we have seen broad pushback from consumer advocates, legislators, and industry on the Federal Reserve’s misguided proposal to dramatically reduce debit interchange revenues under Regulation II. As such, it’s imperative that this proposal be put on pause and the negative real-world impacts be studied before it’s finalized, which is what Sen. Ted Budd’s legislation would require.  We have 13 years of data that demonstrates that this proposal would result in reduced consumer access to free checking accounts, and other essential banking services, which is what happened with the original Regulation II proposal in 2011. We’re thankful for Sen. Budd’s leadership on this important issue and urge Congress to pass this legislation to protect millions of American consumers.”

Independent Community Bankers of America CEO Rebeca Romero Rainey said:

“The Federal Reserve’s debit card proposal doesn’t use full and complete data from community banks, ignores its potential impact on fraud controls, and could jeopardize access to low-cost and no-cost banking services in the local communities that community banks serve,” Independent Community Bankers of America President and CEO Rebeca Romero Rainey said. “ICBA and the nation’s community banks strongly support Sen. Budd’s Secure Payments Act of 2024 to require the Fed to study the impact of its proposal on consumers, community banks, and access to deposit accounts, and we thank him for introducing this important legislation in the Senate.”


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