The American Bankers Association joined a broad coalition of state bankers associations and credit union associations in a strongly worded letter sent Friday to congressional leaders opposing S. 4674, the Credit Card Competition Act of 2022. The bill, which was introduced by Sens. Roger Marshall (R-Kan.) and Dick Durbin (Ill.), would create new credit card routing mandates that will affect banks that issue credit.
The bill would require covered credit card issuers to add a second network to their customers’ cards, but banks would only be allowed to choose from certain options set by the Fed. In this regard, the bill goes further than the rules put in place for debit card transactions under the Dodd-Frank Act’s Durbin Amendment in 2010, where a bank could choose any two unaffiliated networks. The bill would also require that banks accept virtually any kind of transaction, regardless of the security or fraud recourse it carries, forcing banks to onboard potentially many more than two networks.
In the letter, the groups emphasized that among other things, the bill would lead to fewer options for consumers, threaten consumer data privacy, adversely affect banks and credit unions, and cause the elimination of credit card rewards programs that consumers value.
“Far from increasing competition in the credit card marketplace, this legislation will reduce the number of credit card issuers competing for consumers’ business, wring out the competitive differences among card products, decimate card rewards programs (e.g. airline miles) valued by American families and our tourism sector, and put the nation’s private-sector payments system under the micromanagement of the Federal Reserve Board,” the groups wrote. “The Marshall-Durbin bill does all this by using legislation to award private-sector contracts to a small handful of the sponsors’ favored payment networks in order to pad the profits of the largest internet and national merchants who are raising prices on American families far more than the real rate of inflation.”