More than 140 organizations have recently voiced opposition to a bill introduced in the U.S. Senate that seeks to enhance competition in the credit card network market.
The Credit Card Competition Act, introduced by U.S. Sens. Dick Durbin (D-IL) and Roger Marshall, M.D. (R-KS), would direct the Federal Reserve to ensure that banks that issue credit cards offer a choice of at least two networks over which an electronic credit transaction may be processed, with certain exceptions.
The Electronic Payments Coalition (EPC) is among the approximately 140 groups that are opposed to the measure.
“More than 140 organizations agree that the proposed credit card routing mandates included in the Credit Card Competition Act are bad for consumers, small businesses, and financial institutions of all sizes. This legislation is a cynical attempt to enrich big-box retailers at the expense of everyone else. We know that not a dime in savings will be passed on to consumers because we’ve seen this story before. The last time Congress passed interchange regulations, 98 percent of retailers either failed to lower prices or raised prices while enjoying a multibillion-dollar windfall. Small banks and consumers are going to be the biggest losers, where the cost of banking will go up, popular cash back and rewards programs will disappear, fraud will likely explode, and millions of Americans could lose access to credit altogether,” Jeff Tassey, board chairman of the EPC, said.
The Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU) are also among those against the bill.
“NAFCU fervently opposes Senators Durbin and Marshall’s Credit Card Competition Act of 2022, which only stands to line the pockets of big box retailers at the expense of consumers trying to make ends meet,” NAFCU President and CEO Dan Berger said. “This unsound legislation fails to recognize the existing, robust competition within the payments network. With no modicum of consideration to the overwhelming risk from untested networks, loss of safe and affordable banking products, and higher credit cost it would pass on to consumers and financial institutions, it’s plain to see this bill is just bad policy all around. NAFCU and its members will work hard to stop this legislation in its tracks.”
Jim Nussle, president and CEO of CUNA, concurred.
“The so-called Credit Card Competition Act is nothing more than a massive financial windfall for big box retailers at the expense of consumers,” Nussle said. “CUNA, leagues, and credit unions will fight against any legislative changes to the current operation of credit and debit cards.”
The 140 groups opposed to the bill represent banks, credit unions, merchants, and consumers.