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Credit Card Competition Act stalls; no vote expected this session

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Credit Card Competition Act stalls; no vote expected this session
Research
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Tarah Chieffi Senior writer | The Points Guy

The Credit Card Competition Act, aimed at increasing competition among credit card networks, will not be put to a vote in the current congressional session. The Senate Judiciary Committee held its final hearing on the bill, which was introduced by Senators Roger Marshall and Richard Durbin. The proposed legislation seeks to require banks issuing credit cards to offer at least two networks for processing transactions, challenging the dominance of Visa and Mastercard.

Despite backing from high-profile figures such as President-elect Donald Trump and Vice President-elect J.D. Vance, the bill has seen little progress since its introduction. Senator Thom Tillis expressed skepticism about the bill's chances of passing, suggesting it could "create more problems." He urged Visa and Mastercard to address concerns independently before Congress intervenes.

Senator Josh Hawley criticized the bill as unsustainable and proposed capping interest rates on credit cards as an alternative solution. Meanwhile, Louisiana Senator John Kennedy remained undecided on how he would vote if the bill were brought forward.

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Critics argue that the bill could harm loyalty programs associated with cobranded credit cards. Airlines for America, representing major airlines like United Airlines and Delta Air Lines, launched a campaign against the legislation. Richard Hunt of the Electronic Payments Coalition criticized the hearing as biased towards large corporate interests.

Proponents claim that increased competition would lower fees for consumers and small businesses. However, a Congressional Research Service report suggests that mandated routing changes may not result in consumer savings.

Opposition from various tourism stakeholders highlights concerns about potential negative impacts on travel rewards programs. The American Bankers Association warned that the bill could increase fraud risks and limit credit availability.

In contrast, Senator Peter Welch argued that Visa and Mastercard fees are burdensome for small businesses despite their reliance on these networks for payment processing.

The European Union's experience with capped interchange fees was cited by Bill Sheedy of Visa as detrimental to consumer rewards programs in Europe.

As of now, supporters encourage Visa and Mastercard to seek voluntary reforms while legislative action remains uncertain. Senator Durbin emphasized bipartisan agreement on addressing these issues but questioned why progress has stalled.

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