A Federal Reserve proposal to lower debit interchange fees could make Bank On-certified accounts too costly for banks to offer their customers, undercutting an essential financial tool for low- and moderate-income consumers, a bipartisan group of 38 members of Congress wrote today in a joint letter to the Fed.
In a letter co-led by Reps. Nikema Williams (D-Ga.) and Blaine Luetkemeyer (R-Mo.), the lawmakers noted that the number of Bank On-certified accounts has grown from 40 in 2019 to nearly 450 today. However, the Fed proposal to revise Regulation II to lower the cap on debit card interchange fees threatens to undo that progress, they said. “We are concerned that the proposed nearly 30% cut in debit interchange rates could upend the economics that enable financial institutions of all sizes to offer Bank On-certified accounts in a sustainable manner, thereby limiting consumers’ ability to access affordable banking products.”
“Banks and credit unions offering Bank On-certified accounts, in partnership with trusted community-based organizations and local governments, provide consumers with an essential onramp to mainstream financial markets,” the lawmakers said. “These accounts have a demonstrated track record of reaching unbanked and underbanked communities—and are the starting point for the ongoing work of true financial inclusion and aid in a wider mission of closing the racial wealth gap.”
