Legislation seeking to create new credit card routing mandates would benefit big-box retailers at the expense of consumers and community and regional banks, Florida Bankers Association CEO Alex Sanchez wrote in a new op-ed for Fox Business. The Senate bill, sponsored by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), would eliminate consumer choice by allowing retail chains to route their customers’ transactions over the cheapest credit card network regardless of security capabilities or rewards offerings, he said. (A nearly identical bill has been introduced in the House.)
“The result would be an almost guaranteed increase in credit card fraud, a nightmare for consumers and community banks alike,” Sanchez said. “And the rewards consumers love and rely on for everything from cash back to travel perks? Gone. The vast majority of the interchange revenue banks take in goes back into the pockets of consumers in the form of rewards, so curtailing this revenue would almost certainly spell the end of rewards programs as we know them.”
The bill’s sponsors have suggested adding it as an amendment to must-pass legislation, such as the National Defense Authorization Act. “This is the last place an amendment boosting the bottom lines of Walmart and Amazon belongs,” Sanchez said. “If Big Box retailers really wanted to help veterans and service members, they could start by committing to keeping their prices in line with the real rate of inflation.” Sanchez also appeared on Fox Business to discuss his op-ed and other issues.
In related news, the American Bankers Association and the state bankers associations wrote to congressional leaders today urging them to oppose any attempt to advance the bill during the lame-duck Congress, including as an amendment to any appropriations bill. “The impacts of this bill are clear: fewer choices for consumers, increased threats to consumer data and privacy, weakened local banks and credit unions, and the disappearance of card rewards programs that families of all income levels use to stretch their budgets,” the associations said.