The Credit Card Competition Act is back in the news and still a highly debated topic. It was originally proposed in 2022 by Senator Richard Durbin (D-Ill.), Senator Roger Marshall (R-Kan.), Representative Peter Welch (D-Vt.—now a senator) and Representative Lance Gooden (R-Texas).


What Is It?

The bill would require financial institutions with assets of more than $100 billion to enable at least two network options for processing credit card transactions.

At least one of those networks must be an option other than Visa or Mastercard, which control a combined 80 percent of the credit card network market in the U.S.

The National Retail Federation (NRF), one of the major players supporting the bill, says swipe fees are the highest operating cost after labor for most retailers.

As a small business owner, I find this statement to be questionable. While it may be true for large retailers like Walmart, I don’t think it would apply to most small – medium size businesses.

(CCCA) takes aim at credit card interchange income that issuers receive to offset costs and provide benefits in offering credit cards to their customers.

Why Support or Oppose It?

Supporters of the CCCA say that it will lower costs for businesses which will result in lower costs for consumers. With record inflation impacting our purchasing power, who would object to lower prices?

Smaller financial institutions and credit unions for starters. The legislation hurt small financial institutions like credit unions by limiting their ability to even offer members a credit card.

If it passes, it will severely limit the benefits that consumers receive from using credit cards and could change how they can use their credit cards in future.

If history is an accurate predictor of the future, I would personally speculate that if it passes, it will do more harm than good.

Our well-meaning government often makes things worse with additional regulations placed on businesses. For example, 12 years ago, the Durbin Amendment started out with the same intentions.

The Durbin Amendment

In the 12 years since its enactment, it is very clear that the Durbin Amendment has failed to accomplish its mission. According to the Federal Reserve Bank of Richmond only 1.2 percent of merchants lowered their prices, and 22 percent increased them! Rather than pass along the savings, large retailers pocketed what could have been used to lower prices.

The Durbin Amendment also resulted in the elimination of popular programs such as low-fee accounts and debit card reward programs. By placing caps on debit interchange fees, revenues for credit unions and community banks were severely reduced.

Smaller financial institutions were not able to provide consumers with perks such as free checking accounts or debit reward programs. These services were very popular with consumers, and when they were eliminated, people lost the value that went with these important financial products.

What you can do

Groups on both sides of the Credit Card Competition Act encourage consumers to contact their representatives in Congress:

  • The Electronic Payments Coalition opposes the legislation, predicting that it will decimate credit card rewards programs without leading to a meaningful decline in retail prices for consumers. It provides guidance for contacting lawmakers at the website Hands Off My Rewards.

  • The Merchants Payments Coalition supports the legislation, saying it will make fees paid by retailers more transparent and competitive, could lead to lower prices, and doesn’t have to affect credit card rewards programs. It explains its stance at the Merchant Payments Coalition website.