Commentary: Do you trust retailers to secure consumer payments? We don’t
Richmond Times-Dispatch Op-Ed: Commentary: Do you trust retailers to secure consumer payments? We don’t
By Matt Bruning, Steve Yeakel and JT Blau
October 18, 2024
Virginia is an economic powerhouse, and its banks and credit unions are constantly evolving to meet consumers’ needs. The way you pay for food, order clothes, store your money and find loans involves tools your parents or grandparents never had. From mobile banking to tap to pay, technology enables hassle-free payments. Many of Virginia’s banks and credit unions have existed for generations, yet they are on the cutting edge of reflecting consumer preferences and fighting fraud.
As representatives of the commonwealth’s banking and credit union trade associations,we know the investments our members make to provide the most consumer-friendly and financially secure experience possible. Now those efforts are under attack in Washington and will hit your wallet.
When you log in to your account, use a bank-issued credit card or apply for a loan, state-of-the-art tools developed by financial institutions protect your data and your money. However, thanks to a bill from Sens. Dick Durbin, D-Illinois, and Roger Marshall, R-Kansas, the credit card system customers know and trust will be permanently altered for the worse.
Instead of allowing customers and financial institutions to continue to choose the most secure protections on their credit cards, the CCCA will allow retailers to pick how the payments are routed.
The innocent sounding “Credit Card Competition Act” (CCCA) adversely impacts the competitive credit card market. If the CCCA passes, the government can write new regulations on how credit card transactions are routed, removing consumer choice and allowing retailers to pick less secure networks instead of the established networks used today.
This bill will also negatively impact popular credit card rewards programs.
Recent research shows that people across all income levels have similar access to rewards and earn similar rates of return. Cash back is the most popular option and helps customers pay daily expenses. Business customers — especially small and minority-owned businesses — also appreciate the convenience of credit cards and rewards our members offer. It’s a secure payment method for inventory or supplies, and owners use rewards to reinvest in their business.
Today, when consumers make a purchase with a credit card, they can trust that their bank or credit union is safely controlling how their payment is routed and protecting their personal financial data. Banks and credit unions uphold rigorous data security standards with their routing partners.
Instead of allowing customers and financial institutions to continue to choose the most secure protections on their credit cards, the CCCA will allow retailers to pick how the payments are routed. Megaretailers will opt for the less secure option, compromising the security of their customers’ financial information to grow their own profits. Customers’names and credit card numbers will move across routing networks with low standards, often based in foreign countries with little security infrastructure. Megaretailers like Walmart, Amazon and Home Depot want this legislation to become law so they can grow their profits at the expense of consumer financial security.
Our organizations work relentlessly in Virginia to support financial literacy efforts,professional development opportunities and economic education. Recently, we worked together on bills to combat elder financial abuse. It’s a growing problem and one we continue to address.
However, we shouldn’t have to fight on another front. Allowing retailers to route credit card payments on unsecure networks will force us to divert resources to fight these new fraud vulnerabilities. It will take away from where we should be focused: providing access to credit, helping veterans start new businesses, underwriting mortgages and investing in our communities. These are the core activities of banks and credit unionsthat grow our economy.
It’s not too late to stop this bill. The government should not mandate how credit card payments are processed. It takes choice away from consumers and puts customers and businesses at greater risk of fraud. Our members spend billions of dollars to protectcustomers, and we need the government on the side of security. Contact Sens. TimKaine and Mark Warner and tell them to oppose the Credit Card Competition Act and stand up for Virginia consumers.
Matt Bruning is executive vice president of government and member relations at the Virginia Bankers Association.
Steve Yeakel is president and CEO of the Virginia Association of Community Banks.
JT Blau is chief advocacy officer at the Virginia Credit Union League.