A proposed bill to impose network routing requirements on banks that issue credit cards is anti-consumer, anti-competitive and will harm everyone except large merchants, the American Bankers Association and 51 state bankers associations said today in a joint letter to congressional leaders. ABA also joined with other bankers and credit union associations yesterday to condemn the bill.
The Credit Card Competition Act was introduced in Congress last year but failed to advance due to the efforts of bankers and other stakeholders who recognized the potential harm to consumers. Groups representing large merchants have been pressuring lawmakers to revive the bill, with the legislation expected to be reintroduced as early as today. In their letter, ABA and the state associations said the legislation would raise costs on consumers, reduce access to important card benefits, imperil payment system security and harm community financial institutions.
“Make no mistake: this bill was specifically written to deliver a major payday for big retail and big grocery at a time that these giant retailers have been getting even bigger, increasing their profits, and raising prices on American consumers,” the associations said.
In a separate joint statement with national associations representing banks and credit unions, ABA noted the U.S. currently has the safest, most convenient and most customer-friendly payment system in the world. “If the big-box retailers get their way, American consumers will lose the credit card rewards they’ve earned and rely on to help pay for family vacations or dinners with friends and to put some extra cash in their pockets to cover the cost of gas and groceries,” the groups said. “We saw this happen once before when Senator [Dick] Durbin slipped debit card regulations into the Dodd-Frank Act in 2010, leading to the elimination of popular debit card reward programs and many free checking products. Meanwhile, the big-box retailers broke their promise to lower prices.”