Synchrony Financial expects the Consumer Financial Protection Bureau to issue a final rule in the fourth quarter regarding its proposal to cap credit card late fees, CEO Brian Doubles said Tuesday.

At that point, the issue “is likely to be litigated,” based on what executives at the private label card issuer have heard, Doubles added during the company’s second-quarter earnings conference call with analysts.   

The CFPB has proposed amending the Credit Card Accountability Responsibility and Disclosure Act, or CARD Act of 2009, to effectively cap credit card late fees at $8 per payment, and ban those fees from being more than 25% of the minimum payment. Banks, credit unions, consumer finance organizations and individuals submitted more than 200 comments on the CFPB’s plan leading up to the May deadline. 

Doubles said the company disagrees with the CFPB’s stance on $8 late fees, contending it will restrict credit to some borrowers and make credit more expensive to many. Among card issuers, Stamford, Connecticut-based Synchrony and Columbus, Ohio-based Bread Financial are those that stand to be the most impacted by the CFPB’s proposed cap on late fees, because that income makes up a more significant portion of their overall revenue. 

Still, the company has to prepare for the change as it’s proposed, and that includes planning revenue offsets Synchrony is ready to put in place.

“We’re having very productive conversations with our partners around different offsets,” Doubles said.

Synchrony’s merchant partners “clearly understand that this is an issue the entire industry has to deal with,” he said. “It’s likely going to result in new pricing models, new pricing actions across all issuers.”

Some of Synchrony’s retail partners include the retailers Lowe’s and Sam’s Club.  

Such actions might include higher annual percentage rates, different types of fees and penalty pricing, Doubles said. Underwriting has also been part of the dialogue with retailers, he added.

“I think [merchant partners] fully appreciate that, without some of these pricing offsets, a fairly significant portion of the customers that we underwrite today might lose access to credit,” which neither party wants, he said. 

“Our goal is to protect the partners, we want to offset the impact here, and continue to underwrite the customers that we do today,” he said. “There’s a lot still to be decided here.”

Quarterly net earnings fell 29% year-over-year, to $569 million, the company said in its earnings release Tuesday.