Payments 3.0: The Complications of Trump 2.0

Don’t start laying off your compliance and government-relations teams just yet.

After the Republican sweep of the White House and Congress, the payments industry seems to think its regulatory problems are solved. With the Congressional Review Act to eliminate present regulations, campaign promises for deregulation, and calls to “delete” the Consumer Financial Protection Bureau, life looks like it will get a lot easier.

But does anybody believe it is that simple?

Let’s examine these and a few other factors that suggest the industry should recalibrate its expectations and strategies.

First, the Congressional Review Act is a tool by which Congress can void a regulation and prevent a substantially similar one from being proposed in the future. The Open Banking Rule that implements section 1033 of the Dodd-Frank Act has been discussed as a candidate for this treatment.

Although the CRA has been successfully used in the past, it has a tight timeline. Congress has 60 legislative days (days when Congress is in session) from the time the rule is delivered to repeal it.

Keep in mind the new Congress will be especially busy. At the same time, the financial-services industry probably is not the only one that would like to see recent rules taken off the books.

To have a rule removed, the industry must convince a Representative to take up the rule, push a repeal through, and get it all done very quickly.

A further complication is that the CRA might not be the last word. For example, the open-banking rule is required under previous law. So, the question is whether the CRA can in effect overturn a section of previous law. Is it legislation through deregulation?

Now, about “deleting” the CFPB. That makes for a nice sound bite, but will it happen? It didn’t under the first Trump term. In fact, the Republican administration may find the CFPB is a worthwhile agency.

For example, in the first three years of the first Trump administration, the CFPB filed 69 enforcement actions (and an additional 48 in 2020). Compare that to 67 enforcement actions in the first three years of the Biden administration.

Members of the administration also have experience with the Bureau. U.S. Attorney General nominee Pam Bondi worked with the CFPB in 2015 as the Florida attorney general to get a $27.7-million judgment against a foreclosure-relief company.

Also, the CFPB has claimed authority to regulate big tech companies. Big tech has had critics on both sides of the aisle, and they may want to take advantage of this.

One last consideration for compliance going forward is the economy, particularly the intersection of inflation, tariffs, and credit card fees.

Fighting inflation is going to be a critical consideration for the new Congress and Administration. In September, then-candidate Trump said in a campaign rally that he wanted to cap credit card interest rates at 10%. That may still come to pass if he sees it as a way to control inflation, particularly since it has support from far-left Democrats.

And while, to my knowledge, it hasn’t been discussed, it is not hard to imagine merchants seeing this as an opportunity to push interchange caps. The case could be made that rate caps would offset tariffs. If that seems far-fetched, ask yourself how much the Trump properties pay in card fees each year.

So, instead of popping champagne, the industry should be planning campaigns to protect its interests in the new political landscape. Companies need to identify what the new legislators and regulators have on their agenda and work out how they will address concerns both individually and as an industry.

—Ben Jackson bjackson@ipa.org