OPINION: The Credit Card Competition Act (CCCA) is a Big Box Bailout in Disguise
Adoption of the CCCA would line the pockets of big box retailers, increase risks to information privacy and security, pass higher credit card costs onto consumers, and harm credit card rewards programs
It is no secret Americans are struggling financially with rising inflation and rapid price increases at the grocery store, the gas pump, and practically every other stop, causing havoc with consumers’ pocketbooks and budgets.
To add to consumers’ financial stress, Senators Dick Durbin, D-IL and Roger Marshall, R-KS, have resurrected a previously-failed bill, the “Credit Card Competition Act (CCCA),” which is not about competition at all. The current version of the bill, S.B. 1838, is no better than a bailout in disguise for big box retailers, creating government intervention in a free market and establishing a back-door price control on the credit card system, increasing their profits at the expense of consumers and financial institutions. I have zero confidence the current bill would offer protection or savings to credit card consumers and prefer to call it the “Big Box Bailout Bill.”
There are a number of issues contained in this legislation that would negatively impact consumers while benefitting retailers, including giving retailers control over payment networks, increasing risks to the privacy and security of consumers' financial data, and passing higher credit card costs to them to name a few.
Let’s dive a little deeper into how this bill will negatively impact consumers by costing them more and compromising the security of their information.
First, the legislation allows retailers to pick whichever network they want to process transactions. Retailers would have the ability to opt for cheap, untested networks, putting many consumers’ financial data at risk. Higher credit card costs associated with combatting fraud and replacing cards would be passed along to consumers and the financial institutions who serve them.
It would also reduce or eliminate funding for credit card rewards programs and cashback options that American families rely on. Credit card rewards programs may not be important to all, but their impact is resounding. In 2020, U.S. credit card rewards programs returned roughly $60 billion to consumers of all income levels, helping working class families pay for groceries, back-to-school shopping, or a much needed family trip.
Forget about cost savings being passed down from retailers to consumers, as proponents claim. The original Durbin amendment passed in 2010 with similar restrictions on debit cards. History has shown that, despite retail lobbyists' promises, debit card restrictions did not lead to cost savings for consumers and small businesses. Research from the Federal Reserve Bank of Richmond found that 98.8% of merchants did not decrease prices, and in fact, 21.6% increased prices.
It is extremely concerning that Senator Durbin and his colleagues repeatedly try to pass this bad legislation year after year. We are asking that our elected officials be our watchdogs and protect consumers and financial institutions from these harmful attempts.
Sincerely,
Sterling Nielsen
President and Chief Executive Officer, Mountain America Credit Union
