The proposed legislation is a clear attempt to secure yet another windfall for the largest multinational retailers and e-commerce giants at the expense of the security of the payments ecosystem and the financial health of everyday Americans. Consumers will pay the price, while many small issuers will be forced to exit the credit card business altogether. Senators Marshall and Durbin should not reengineer the entire payments system just to benefit a small group of the largest retailers while causing smaller financial institutions and their customers to suffer.
The impacts of this bill are clear: fewer options for consumers, greater threats to consumer data and privacy, weakened community banks and credit unions, and the disappearance of card rewards programs that families of all income levels use to stretch their budgets.
This bill would let retailers choose the cheapest payment network regardless of its security, giving bigger windfalls to big box retailers that promised to pass savings from interchange fees on to consumers — then never did.
Despite Marshall’s claim that the bill would increase competition, his proposal would harm consumers, small businesses and community banks in our state, all to pad the profits of retail giants that benefit immensely from the existing payments system.
This proposal is bad news for Kansas banks and very bad policy for individual Kansans that look to their local bank for credit card services… While the authors of this bill claim it will enhance competition, the fact is this proposal will jeopardize the ability of Kansas banks to provide the high-quality credit card payment options Kansans want and need.
I’ve read the claims by Senators Marshall and Durbin that their mandate will exempt community banks, but that is a misunderstanding of how the credit market works – there is no operational or practical business way to keep the market from driving this mandate to every bank that wants to offer credit cards to its customers.
Under the guise of competition, the Marshall-Durbin bill would do little to help consumers, but it would be a gut punch to community banks like mine which would be forced to pay for a new federal mandate that restricts our ability to serve our credit card customers’ wants and needs.
While the authors of this bill claim it will enhance competition, the fact is this proposal will jeopardize the ability of Missouri’s community banks to provide the high-quality credit card payment options that Missourians want and need.
There’s no evidence those merchants have passed on savings as promised for changes mandated for debit card routing by prior legislation, and consumers are, in fact, harmed by reduced network quality, reduced consumer protections, and reduced security.
While big merchants are fighting against bicameral legislation that would scrutinize their spiraling price increases amid rocketing retail profits, they eagerly support the Marshall-Durbin federal price controls. They fail to mention that credit card acceptance fees were recently reduced for small merchants and food stores. We urge you to reject this cynical manipulation of our nation’s payments system for narrow financial gain.
“Routing mandates on credit cards is a multibillion dollar corporate welfare scheme for big box retailers that will lead to less secure, less innovative, and higher-risk transactions for American consumers”
“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,” said NAFCU President and CEO Dan Berger. “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.”
The so-called Credit Card Competition Act is nothing more than a massive financial windfall for big box retailers at the expense of consumers. CUNA, leagues, and credit unions will fight against any legislative changes to the current operation of credit and debit cards.
The bill contains a cynical carve-out for smaller institutions, but that’s smoke and mirrors. By regulating the largest institutions and payments networks, the bill will force changes to the whole credit card ecosystem. That means credit unions will have to pay for things like updates to technology and resistance of cards. It will cost billions of dollars and it will disproportionately affect credit unions that do not have the resources of big banks.