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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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Credit cards play an essential role in the American economy. Credit cards serve as a valuable line of credit to millions of Americans who don’t always have the financial means to make large purchases, enabling users to make quick purchases using an alternative payment method. Credit cards are also easy to use, reduce the need to carry dangerous amounts of cash and are widely accepted by merchants and businesses. Many provide various benefits like travel rewards, cash back on purchases and state-of-the art fraud protection. 

Unfortunately, these benefits are under threat due to the possible resurrection of the Credit Card Competition Act of 2022.

First introduced last July by Senate Majority Whip Richard Durbin, D-Ill., with the help of Sen. Roger Marshall, R-Kan., the CCCA claims to enhance “competition and choice in credit card network market” by mandating that card-issuing banks work with at least one alternative payment network besides Visa and Mastercard, the two current largest industry players.

In addition, the CCCA imposes a cap on swipe fees, better known as interchange fees, which merchants are charged each time a customer completes a transaction with a credit card. Banks are free to partner with as many, or as few, credit networks as they like and charge merchants fees that typically range from just 2 percent to 3 percent per purchase. While unpopular, these fees are important in helping payment networks cover the cost of processing a transaction and card-issuing banks to cover the cost of providing popular services.

Durbin and Marshall believe the CCCA would provide merchants with important cost savings that they can pass on to consumers lower prices. History tells us that’s unlikely to occur. In fact, the CCCA is sure to produce profoundly harmful effects on consumers who benefit from the current credit card and payment market.

The CCCA is largely inspired by the Durbin Amendment — an important provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — which imposed onerous regulations on the debit-card market similar to those the CCCA proposes for the credit-card market. These included establishing an official limit on debit-card interchange fees and requiring card issuers to offer merchants the choice of at least two unaffiliated payment card networks — in other words, network competitors.

The results were disastrous. Most card-issuing banks were forced to discontinue popular services, such as free checking accounts and debit-card rewards programs, to comply with the amendment and remain profitable. Worse, consumers received none of the intended cost savings. Instead, big-box retailers pocketed this money and continued to charge consumers the same prices as before. 

A 2014 Economic Quarterly article by the Reserve Bank of Richmond and Javelin Strategy Research found that after the amendment’s passage, just 1.2 percent of merchants lowered their prices, with 21.6 percent actually increasing them. Only 10 percent of merchants reported experiencing a decrease in costs.

Other research has consistently found that the amendment was strongly correlated with a decline in both the quality and availability of banking services, leading to higher monthly fees for users, increased minimum balance requirements and the elimination of free checking accounts.

The CCCA would have similarly disastrous consequences. The credit market, as it exists today, is mutually beneficial to both merchants and consumers. Consumers have the luxury of purchasing goods and services at virtually any retailer they choose with the mere swipe of their hand. They also enjoy the wide variety of benefits that credit card rewards provide. These benefits explain why 83 percent of American adults report owning at least one credit card, with many holding more than three. Cardholders contribute enormously to consumer spending — almost 70 percent of the U.S. gross domestic product.

Merchants also benefit from the credit market. For the price of a small swipe fee, they have the luxury of selling goods and services to these same consumers, who, without access to credit, may not have chosen to make a purchase. Merchants also benefit from not having to assume the risk of each transaction and can save money by reducing the size of their workforce when they adopt cashless payment systems.

Passing the CCCA would upend this arrangement to the detriment of all involved. Consumers would lose access to many of the rewards programs they have come to love and to cheap credit, good customer service, regular system improvements and some of the best data security features available on the market, such as easy-to-obtain credit cards that possess Europay, Mastercard, and Visa computer chips.

While saving money on interchange fees, merchants may lose some of their customer base and some of the security benefits that accompany working with the best credit networks since they would invariably choose the cheapest network option. Community institutions, such as credit unions, would also inevitably suffer, harming the market competition the CCCA is designed to help.

Should the CCCA be introduced again in this Congress, as Durbin’s office has indicated, lawmakers should consider the fallout for consumers and the credit-card market that would likely come about as a consequence of this modern equivalent of the Durbin Amendment.

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