More competition. Lower fees. Less Chinese access to Americans’ data.
Those are the pitches supporters are making for the Credit Card Competition Act (CCCA), and a new poll shows they appear to be working.
More than 55 percent of 2,040 likely voters surveyed by co/efficient said they supported the bill. Another 48 percent said it didn’t matter if the CCCA caused them to see reduced reward points in exchange for lower fees.
The CCCA is a bipartisan bill in Congress that aims to increase competition in the credit card industry. The bill would require large banks to allow more choice in payment networks for processing credit card transactions, and would prohibit them from restricting the number of networks that can be used. The CCCA would also allow merchants to choose the network that processes a consumer’s purchase.
Additionally, the bill addresses concerns about China-based UnionPay, the largest global network when measuring market share of total volume, by requiring the Federal Reserve to create a list of payment card networks that pose national security risks and block them from the U.S. credit card market.
The Merchants Payments Coalition, a group of merchants supporting the CCCA, pointed to an agreement Visa and Mastercard made with the European Commission this month that caps tourist card fees until 2029. The coalition wants to know why Visa and Mastercard won’t make a similar agreement in the U.S.
Advocates say big processors can negotiate their fees, but smaller businesses don’t have the clout. Many small businesses then pass on those costs to consumers, resulting in higher prices at the pump, grocery store, and other retail outlets. Currently, the U.S. has some of the highest credit card processing fees in the world.
“They’re too much for small businesses to absorb and end up costing the average family over $1,000 a year in higher prices,” said Morgan Harper with the American Economic Liberties Project.
The co/efficient poll, commissioned by the Merchants Payments Coalition, found 42 percent of voters plan to support a U.S. Senate candidate who backs the CCCA. That included 46 percent of Democrats, 41 percent of Republicans, and 37 percent of independents.
The CCCA targets the fees Visa, Mastercard, and banks charge for credit card usage, and it’s got the support of large trade groups including the National Grocers Association, National Restaurant Association, and National Retail Federation.
Not surprisingly, the bill is opposed by credit card companies and their allies in the banking industry. They argue consumers don’t understand how interchange fees are put together. They say merchants aren’t the ones paying the fees but are paying for a “merchant discount” to banks. It’s part of their processing services from financial institutions.
Norbert Michel with the Cato Institute’s Center for Monetary and Financial Alternatives told InsideSources the CCCA might hurt more than help. “I do think it will result in the credit card companies having to either eat the higher costs or make them up by raising fees/lowering rewards,” he said.
And critics of the bill claim it would make frequent flyer rewards programs disappear. But supporters like Sen. Dick Durbin (D-Ill.) note, “The European Union put a hard cap on credit card swipe fees at .3 percent and their banks and airlines still offer points and miles programs.”
Despite critics’ claims about the possibility of lower credit card rewards points, American consumers appear willing to make the tradeoff for lower swipe fees. When presented with the credit card industry’s leading argument that the CCCA will mean less rewards, respondents in the co/efficient survey still said they would be more likely to support the bill by a greater than 2-to-1 margin.
Originally proposed in 2022 by Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.), the bill gathered more steam last year when Sen. JD Vance (R-Ohio) – now the GOP nominee for vice president — signed on to an updated version, along with Vermont Democrat Sen. Peter Welch.
On the foreign policy front, China-based UnionPay isn’t just another processing company, CCCA supporters say. It’s part of the People’s Bank of China, which is under the control of the Chinese Communist Party. Polls indicate broad support among both Trump and Biden voters for preventing Chinese banks from gaining a larger foothold in the U.S. financial market.
A bill summary document from Durbin’s office said that the interchange fees take at least $1 from everyone $100 sale. He accused Visa and Mastercard of purposefully putting their credit card networks together to avoid dealing with competition.
The CCA would require Visa and Mastercard to create a second credit card network for cards. Banks and merchants could decide which network they’d use.
Supporters accused banks and credit card companies of price-gouging and driving up the costs for small businesses.
“With all the other money banks are raking in, they could easily lower swipe fees and continue to provide generous rewards and cover security costs,” said Harper.
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