SB3849 amends the Electronic Fund Transfer Act to require annual inflation adjustments to the statute’s dollar threshold found in 15 U.S.C. 1693o–2(a)(6)(A). The change forces the designated federal Board to update that dollar amount each year so the threshold keeps pace with consumer‑price inflation.
The practical effect is to preserve the real value of the statutory threshold that determines which payment‑card issuers qualify for the small‑issuer exception under the EFTA’s payment‑card rules. For community banks and credit unions near the current cutoff, that means the threshold will rise with inflation rather than erode over time — a change that shifts compliance, revenue, and pricing implications across issuers, merchants, and regulators.
At a Glance
What It Does
The bill directs the Board (as defined in the EFTA) to adjust the dollar amount in 15 U.S.C. 1693o–2(a)(6)(A) annually using the annual percentage change in the Consumer Price Index (CPI) for October. It also prescribes a one‑time initial adjustment that measures CPI growth from October 2009 to October 2025.
Who It Affects
Institutions and actors whose status depends on the statutory dollar threshold in subsection (a)(6)(A) — primarily community banks, credit unions, and other card issuers near the cutoff — plus merchants that accept card payments and the federal agency responsible for implementing the adjustment.
Why It Matters
Indexing the threshold preserves the statute’s intended real‑value cutoff and can expand the pool of issuers qualifying for small‑issuer treatment over time. That redistribution affects interchange economics and compliance obligations across the payments ecosystem and requires an annual administrative update by the Board.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
SB3849 adds an automatic inflation‑indexing rule to a specific dollar amount in the Electronic Fund Transfer Act: the figure listed in 15 U.S.C. 1693o–2(a)(6)(A). The bill does not change any language about the underlying policy (it does not rewrite payment‑card rules); instead it changes how the numerical cutoff is updated so the threshold’s purchasing‑power is maintained.
The text instructs the Board to use the Consumer Price Index for October as the yardstick.
The bill sets two timing rules. First, it requires an initial ‘‘catch‑up’’ adjustment that compares the CPI for October 2025 with the CPI for October 2009 and increases the statutory dollar amount by that cumulative percentage.
After that initial step, the Board must apply annual adjustments: not later than July 1, 2026, for the first scheduled update under the new regime, and then no later than January 15 of each subsequent year, using the annual percentage increase in the October CPI for the applicable year.Mechanically, the statute instructs ‘‘the Board’’ to compute and publish the adjusted amount. The bill also performs a simple technical renumbering (it redesignates an existing subparagraph (B) as (C)).
Because the bill only changes the indexation mechanism and timing, it leaves intact the EFTA’s other statutory language that ties issuer classification and any regulatory exemptions or restrictions to that dollar figure.For compliance officers, the visible obligations are limited: an annual published figure to apply when checking whether an institution meets the statutory dollar cutoff. For issuers and merchants, the change is material because a rising threshold can alter which firms qualify for the small‑issuer exception (or other status driven by that dollar figure), with downstream effects on interchange fee treatment, pricing, and reporting.
The Five Things You Need to Know
The bill amends 15 U.S.C. 1693o–2(a)(6)(A) by requiring the statutory dollar amount in that subsection to be adjusted for inflation annually using the October Consumer Price Index.
The Board must make an initial adjustment equal to the percentage change between the Consumer Price Index for October 2025 and October 2009 before the routine annual indexing begins.
Timing: the first scheduled update under the new regime must occur not later than July 1, 2026; thereafter the Board must publish the adjusted figure by January 15 each year.
The bill explicitly redesignates the existing subparagraph (B) as subparagraph (C), a technical renumbering to accommodate the new inflation‑adjustment subparagraph (B).
The statutory text delegates the calculation and publication duty to ‘‘the Board’’ as referenced in the EFTA, rather than creating a new agency process or standard.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Short title — Community Bank Relief Act
This is the bill’s caption; it has no operative effect on the underlying statute. The short title signals intent but does not alter legal obligations.
Insert inflation adjustment provision and renumber subparagraphs
The core amendment inserts a new subparagraph (B) that requires annual CPI‑based adjustments to the dollar amount referenced in subparagraph (A) and moves the prior subparagraph (B) to (C). Practically, that means the numeric cutoff used elsewhere in subsection (a)(6) will change automatically each year rather than remaining fixed in nominal terms. The renumbering is administrative but necessary to preserve cross‑references in the statute.
Annual indexing rule and schedule
Clause (i) sets the mechanics and schedule for ongoing updates: use the annual percentage increase in the Consumer Price Index for the month of October, with the Board required to make the adjustment not later than July 1, 2026 for the initial indexed value under the statute and then by January 15 of each following year. That schedule creates two compliance deadlines in year one (initial publication by July 1, 2026, followed by the first January 15 deadline in 2027) and a consistent January cadence thereafter.
One‑time catch‑up adjustment tied to 2009 baseline
The exception clause requires the Board, before the first routine annual adjustment, to increase the statutory amount by the percentage growth in the CPI from October 2009 to October 2025. This catch‑up recognizes the long interval since the original statutory baseline and effectively re‑establishes the threshold in 2025 dollars before continuing with year‑to‑year CPI updates.
This bill is one of many.
Codify tracks hundreds of bills on Finance across all five countries.
Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Community banks and local credit unions near the statutory cutoff — preserving or raising the nominal threshold increases the likelihood they will qualify for the EFTA’s small‑issuer treatment, protecting fee‑revenue and regulatory status that would otherwise erode with inflation.
- Smaller card issuers that rely on small‑issuer exemptions — indexation reduces the risk that inflation alone pushes them past a rigid nominal cutoff and into a different regulatory regime, easing long‑term planning for pricing and compliance.
- Existing customers of small issuers may indirectly benefit if issuers retain fee structures or services tied to small‑issuer status, supporting local lending and product offerings.
Who Bears the Cost
- Merchants and large‑scale merchants’ processors — if indexation expands the class of issuers exempted from fee caps, merchants may face higher interchange costs or weakened bargaining leverage with networks and issuers.
- Card‑accepting businesses and consumers — higher interchange can feed into merchant prices or constrained acceptance choices; small retailers with thin margins are especially exposed.
- Regulatory bodies and the Board — the Board must implement, calculate, and publish the adjusted figure annually, adding a recurring administrative task and creating coordination needs with supervised institutions and data providers.
Key Issues
The Core Tension
The bill reconciles two legitimate goals that pull in opposite directions: preserving a real‑value threshold to protect smaller community issuers versus avoiding a policy that increases costs for merchants and consumers or shelters larger institutions by default. Indexation solves the erosion problem but reallocates economic burden across the payments ecosystem, and it does so while leaving open who administratively owns the rulemaking steps required to make it operational.
Indexing a statutory dollar cutoff to CPI looks administratively tidy, but it creates several practical and policy questions. First, the choice of CPI for October as the index and the 2009 baseline for the catch‑up are mechanical but consequential: CPI‑U growth is one way to preserve purchasing power, yet bank asset growth and industry consolidation do not move in lockstep with consumer prices.
That mismatch can lead to a threshold that departs from the original policy intent — either sheltering larger institutions than intended or failing to protect small issuers in periods of rapid bank consolidation.
Second, the bill delegates implementation to ‘‘the Board’’ without revising EFTA’s definitional framework. In the post‑Dodd‑Frank/CFPB era, a careful reader must trace what ‘‘Board’’ means for this subsection and whether the Board’s administrative action requires rulemaking, notice‑and‑comment, or simple publication.
That ambiguity could delay or complicate the first adjustment and create legal friction between agencies over authority. Finally, indexation shifts economic incidence rather than eliminating it: protecting community banks by restoring a real cutoff likely raises costs borne elsewhere in the payments chain, and the bill contains no compensating measures (data collection, merchant relief, or sunset provisions) to address those distributional effects.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.