The Case Against Credit Mandates and Price Controls Continues to Build

By SBE Council at 7 February, 2026, 9:31 pm

by Raymond J. Keating -

The ills of credit card regulations spread far beyond large banks and credit card payment network companies, contrary to the assertions of advocates arguing for credit card routing mandates and interest rate caps.

SBE Council has weighed in on the many problems related to U.S. Senators Dick Durbin (D-IL) and Senator Roger Marshall (R-KS) pushing legislation imposing credit card payments routing mandates, and Senators Bernie Sanders (D-VT), Josh Hawley (R-MO) and Elizabeth Warren (D-MA), with support from President Trump, advocating for a government-mandated cap on credit card interest rates at 10 percent.

Most recently, SBE Council President and CEO Karen Kerrigan has addressed the ills of credit card interest rate caps, and I penned a piece exploring problems with routing and interest rate mandates. SBE Council also joined nearly 30 taxpayer and free-market organizations in a letter to all members of Congress outlining how price controls and routing mandates would reduce consumer credit access, fail to address affordability concerns, and fragment an already dependable, well-functioning payments system.

Here are a few more points/analyses to keep in mind as to how these misguided government proposals would impact small businesses:

● The Small Business Payments Alliance reported that significant majorities of small business owners oppose Durbin-Marshall-type government mandates, with their survey finding:

-"Most (83%) say government regulation should stay the same or decrease."

-"Two-thirds (64%) believe Durbin-Marshall would benefit large retailers more than small businesses."

-"Two-thirds (64%) say that forced adoption of new/updated processing networks will place an unfair cost burden on business owners, with more than half (57%) expecting to see lower profits if new network processing changes are required."

● In a recent joint letter to Congress, assorted bank and credit card groups opposed the Durbin-Marshall bill, or the ill-named Credit Card Competition Act. It was noted in the letter:

"Small community banks and credit unions themselves are small businesses. But they also play a vital role in our communities. These community-based financial institutions understand the needs of their communities and directly support small businesses and consumers, providing billions of dollars of loans and assistance to consumers, driving local communities forward across the country. Enacting the Durbin-Marshall bill would set backdoor price controls on credit routing, which would ultimately harm small financial institutions' ability to continue to offer affordable financing to American families and small businesses. As we saw with the Durbin Amendment, interchange price controls increase profits of corporate megastores while impairing small financial institutions' ability to provide competitive products and services to consumers and small businesses by decreasing revenue used for lending and data security while increasing operational costs. Federal Reserve data shows that the Durbin Amendment harmed "exempted" community-based institutions."

● In a joint letter from America's Credit Unions, the Defense Credit Union Council, and the Independent Community Bankers of America, it was pointed out:

"Experience with the original Durbin Amendment shows these policies do not benefit consumers. The Government Accountability Office found that, absent Durbin, 65 percent of noninterest checking accounts at covered banks would have been free. Expanding this failed approach to credit cards would similarly reduce access to credit, eliminate popular rewards programs, and increase fraud risks that would fall hardest on lower-income and minority consumers… Claims that community financial institutions are 'exempt' are equally misleading. Federal Reserve data show community financial institutions experienced a 30 percent drop in interchange revenue after the original Durbin Amendment, despite similar exemptions. The same outcome would occur here, reducing funds used for lending and investment in local communities."

These negative consequences, of course, would hit small businesses.

● Regarding a proposed 10 percent federal credit card interest rate cap, an analysis from the American Bankers Association found that "74%-85% of open credit card accounts nationwide would be closed or have their credit lines drastically reduced," and "at least 137 million cardholders - and up to 159 million - would no longer be able to use their cards."

The negatives for the overall economy should be obvious, including in terms of diminished access to credit for entrepreneurs who are seeking to startup, operate and expand businesses, and in terms of the loss of spending power among consumers.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .