WASHINGTON—"Fervent" opposition is being expressed by one credit union trade association after Sens. Richard Durbin (D-IL) and Roger Marshall (R-KS) introduced the Credit Card Competition Act of 2022, which seeks to expand upon the “Durbin Amendment,” which was enacted in 2010 as part of the Dodd-Frank Act.
As proposed, the legislation would expand the interchange process by creating a new credit card routing mandate that “would be a direct detriment to credit unions and their members while lining the bottom lines of big-box retailers,” according to NAFCU.
Added CUNA President/CEO Jim Tussle, “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.”
NAFCU Response
“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.”
In its analysis, NAFCU noted retail groups have been seeing the ability to route credit transactions to the cheapest networks, stating “many of whom have underinvested in their platforms with little concern for security innovations, leaving the burden on consumers, small businesses, and financial institutions to clean up when things go wrong.”
Support from Merchants
Not surprisingly, the National Retail Federation is welcoming the bill, saying it would let retailers decide who processes credit card transactions and end practices that "block competition in the payments industry and drive up costs for retailers and consumers."
“Processing credit card transactions should not be limited to two companies when there are a dozen that can do the job just as well,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said. “Routing choice has saved retailers and their customers billions in the debit card market and can do even more in the much-larger credit card market. This is a giant step forward in bringing about the transparency and competition retailers have sought for years.
"Credit card swipe fees have been driving up prices paid by American consumers for decades but are particularly burdensome amid the near-record inflation families face today,” Buck continued. “These fees are a percentage of the transaction, so they take even more out of retailers’ and consumers’ pockets as prices go up. They are a significant factor in inflation, but one that could be minimized if the card industry would compete the same as other businesses.”