Opponents of the Credit Card Competition Act are bracing for the reintroduction of a bill aimed at creating more competition in a credit network industry dominated by Visa and Mastercard.

A spokesperson for one industry advocacy group, the Electronic Payments Coalition, which has opposed the bill, said Tuesday that it was bracing for the reintroduction of the legislation soon, potentially as early as Wednesday. Other opponents, including the American Bankers Association, also echoed arguments against the legislation in a press release issued Tuesday.  

Sen. Dick Durbin, the Illinois Democrat who spearheaded the legislation last year, would presumably carry the legislation again this year. A spokesperson for his office didn’t immediately respond to a request for comment. Durbin has been on a campaign for more than a decade to inject more competition into the card industry arena.

The bill failed to gain traction in the congressional session that wrapped up last year despite Durbin’s efforts to rally support and take on card industry interests. He argues there isn’t enough competition in the market, leading to billions of dollars in additional costs for merchants and consumers. Durbin signaled in January that he wouldn’t be deterred, and planned to reintroduce the bill in the new session this year. 

As previously proposed, the CCCA would mandate that merchants have access to card networks other than those controlled by Visa and Mastercard for routing credit card transactions. Durbin successfully won passage of an amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that imposed a similar requirement on debit transactions.

“This legislation, which builds upon pro-competition reforms Congress enacted in 2010, would give small businesses a meaningful choice when it comes to card networks, and it would enable innovators to gain a foothold in credit cards,” Durbin said last year on introducing the bill.

Durbin is expected to again sponsor the legislation, along with Republican Sen. Roger Marshall of Kansas, according to a release issued Tuesday by opponents of the legislation. A spokesperson for Durbin didn't immediately respond to a request for comment. A spokesperson for Marshall couldn't immediately be reached.

Reintroduction of the bill would almost certainly stake the long-running battle between bank card issuers and networks on one side of the fight, and merchants and retailers on the other side. While the card interests say the interchange fees help fund important benefits for consumers, including fraud protection and loyalty programs, the retailers call the cost burden excessive.

Trade groups for the bank card issuers and networks oppose such legislation, saying it would reduce benefits for consumers, including fraud protection and rewards programs. Those companies and their advocates, including the Electronic Payments Coalition, argue the legislation is driven by big retailers looking to lower their interchange fee costs.

“Despite vigorous lobbying from Walmart and Target, this ‘Big-box Bill’ was deeply unpopular legislation when it was introduced last year — among both Democrats and Republicans,” EPC Executive Director Aaron Stetter, said in an emailed statement. 

“This legislation would hurt consumers by increasing costs, weakening payment security, harming small financial institutions, reducing access to credit for those who need it the most, and ending popular credit card rewards programs,” Stetter added.

In anticipation of the reintroduction of the legislation, the National Association of Federally-Insured Credit Unions also took a shot at the bill in February. The association, which represents not-for-profit credit unions that provide services to 135 million consumers, told congressional leaders in a letter then that a bill to require more networks be available for the processing of credit card transactions would be counterproductive in that it would benefit retailers, not consumers.

Retail and merchant industry groups have backed the legislation, saying consumers pay dearly for the interchange fees.

“Swipe fees have been exploding over the last several years. In fact, fees were $22 billion higher in 2022 than they were in 2021,” National Association of Convenience Stores General Counsel Doug Kantor said in a release last month. “Fees have increased at a faster rate than card spending. The credit card industry can try to confuse things with misleading data, but their fee increases are huge and are hurting Main Street and American consumers.”

The supporters also argue that credit unions will be helped, not hurt, by Durbin’s proposal because it will exempt financial institutions with less than $100 billion in assets, presumably giving the smaller players a lift in competing against their larger rivals.

“Only one credit union in the entire nation meets that test and the rest are exempt,” Kantor said in response to the letter. “And, the exempt institutions would be more attractive to Visa and Mastercard – helping those small credit unions overcome the disadvantage they have in the market today.” 

By Lynne Marek on June 6, 2023
Original link