ABA to policymakers: Don’t undermine private-sector payments innovation

In a statement for the record of a House Financial Services Committee task force hearing today, the American Bankers Association urged lawmakers to “remain vigilant and deliberate” in their policymaking to ensure that regulations support innovation in mobile banking and payments, rather than overregulating or replacing private sector innovators.

Specifically, ABA called on policymakers to “proceed cautiously with large-scale rewiring” of the payments system, urging them to support “prudently planned” initiatives that are already underway—such as private sector real-time payments initiatives and the Federal Reserve’s FedNow service—rather than pursuing other solutions like creating a central bank digital currency from scratch.

ABA also highlighted the need for consistent regulatory expectations between bank and nonbank payment providers to ensure consumer protection, security and liquidity. Additionally, as cryptocurrencies become more mainstream, ABA warned that current regulations are constraining banks’ ability to offer these products to their customers, and called on Congress to “to monitor actions by regulators that prevent.” ‘

Finally, as banks work to provide consumers with fast, safe and reliable payments options, ABA strongly cautioned against expanding the Durbin Amendment, either through the Federal Reserve’s recent Regulation II proposal mandating that banks of all sizes enable two unaffiliated payment debit card networks and accept “PIN-less” transactions for internet purchases, or through legislation that would extend Durbin’s provisions to credit cards. Such expansions, if enacted, “will most acutely harm community financial institutions that want to participate in digital and mobile payments platforms,” ABA said.