The American Bankers Association today joined nine associations representing banks, credit unions and payment providers in restating their opposition to the Credit Card Competition Act, which would impose new network routing mandates on financial institutions that issue credit cards.
Sen. Dick Durbin (D-Ill.) has stated his intention to reintroduce the bill in the current Congress. Durbin previously cosponsored the bill with Sen Roger Marshall (R-Kan.) In a letter to lawmakers, the associations said any effort to expand the power of the federal government to intervene in the credit card market would harm consumers, small businesses and financial institutions by reducing choice, increasing costs and fraud risks, and creating economic challenges for smaller financial institutions.
Among other things, the associations pointed to recent paper by a University of Miami finance professor found that small businesses would be put “at a further competitive disadvantage” to large stores if the bill were to become law, estimating that most of the savings will accrue to retailers with $500 million or more in annual sales.
“The payment card system is convenient, secure, and hassle-free,” the associations said. “It protects consumers against fraud, guarantees businesses receive timely payments, funds reward programs like cash back, and powers the American economy, from brick-and-mortar establishments to innovative e-commerce platforms 24 hours a day, seven days a week, 365 days a year. The so-called Credit Card Competition Act, and any other legislation that intervenes in the credit card market, puts all that in jeopardy.”
