Coalition warns: Consumers lose with CCCA
A coalition of financial trade groups has joined together in warning Congress that the reintroduced Credit Card Competition Act (CCCA), also known as the Durbin-Marshall credit card mandate bill, would harm consumers, small businesses, and community-based financial institutions.
America’s Credit Unions, together with the groups, again urged Congress to reject the CCCA, which would negatively affect both the credit card processing system and consumers by placing government mandates that don’t address fraud concerns or cost impacts.
In a joint letter sent to all Members of Congress, the group warns that “backdoor price controls on credit routing” would harm credit unions and community banks’ ability to continue to offer affordable credit card financing to American families and small businesses.
The bill would hurt consumers by reducing choice and weakening fraud protections, while also disproportionately affecting low-income cardholders who often rely on cash back and rewards programs that would likely be reduced or eliminated.
The changes that CCCA mandates would primarily benefit the nation’s largest retailers while putting small businesses at a competitive disadvantage. Citing academic research, the group notes that most interchange savings would flow to merchants with more than $500 million in annual sales, while small businesses could lose up to $1 billion in card rewards and face reduced access to hundreds of billions of dollars in revolving credit.
“Congress should not mandate the reengineering of the entire credit card payments system just to benefit a small group of the largest merchants while causing small businesses to suffer,” wrote the group.
The letter concludes, “The payment card system is convenient, secure, and hassle-free. 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 ecommerce platforms 24 hours a day, seven days a week, 365 days a year. The Durbin-Marshall bill, and any other legislation that intervenes in the credit card market, puts all that in jeopardy.”