The American Bankers Association (ABA) along with 52 state bankers associations voiced their opposition to the Credit Card Competition Act (CCCA) this week.
In a joint letter to Congress, the ABA said that the proposal would harm consumers, small businesses and banks of all sizes. They said it would do this by reducing card choice, increasing fraud risks, reducing rewards, increasing the cost of allocating credit to borrowers, and creating economic challenges for smaller financial institutions.
“Recent economic analysis from Oxford Economics Research, an independent advisory firm, found that the CCCA could cost the U.S. economy $228 billion and 156,000 jobs by eliminating rewards programs supporting travel and tourism nationwide,” the letter to Congress read.
Further, the associations warned that the legislation would limit credit access and upend credit card rewards programs, which are funded through interchange fees. They noted that the worst effects would be felt by minority and lower income consumers.
In addition, the groups are concerned that the CCCA would primarily benefit large retailers rather than consumers or small businesses.
“The CCCA will not increase competition in the credit card marketplace, but it will benefit corporate megastores at the expense of consumers, community financial institutions and smaller neighborhood retail merchants,” they wrote in the letter.
In addition, the groups highlight significant fraud risks associated with the legislation. They say that the CCCA would enable a large increase in fraudulent card activity and reduce funding used to invest in fraud prevention and other credit card security features.