Concerns Over Credit Card Rewards in New Legislation

During a recent Breitbart News Policy event, Richard Hunt, the executive chairman of the Electronic Payments Union (EPC), expressed his concerns regarding Senators Dick Durbin (D-IL) and Roger Marshall (R-KY). He accused them of trying to take away credit card rewards through proposed legislation.

Hunt emphasized that EPC is made up of a diverse range of organizations, including credit unions, community banks, larger banks, and unions. He raised alarms about the efforts of Senators Durbin and Marshall to diminish credit card rewards.

For years, Durbin and Marshall have been advocating for the Credit Card Competition Act (CCCA), which Hunt referred to as the “credit card cancellation law.” He pointed out that major retailers like Walmart, Target, and Home Depot support this bill.

Supporters argue that beyond the significant players like Visa and MasterCard, this legislation could foster more competition in payment processing by mandating that banks engage with at least one alternative payment network.

Currently, when merchants accept credit cards, they become “locked in” to the payment network used (mostly Visa or MasterCard), which means they must pay whatever fees that network charges for transactions.

Durbin and Marshall believe that the passing of this bill will increase competition among payment networks, potentially lowering credit card costs for merchants, which could then be passed on to consumers. However, critics warn that the bill could compromise the security of payment processing and jeopardize credit card reward programs, echoing how previous Dodd-Frank laws eliminated debit card rewards.

Hunt noted in his discussion with Breitbart’s Economics editor, John Carney, that Americans had benefited from debit cards that helped provide free checking accounts. But this ended following the introduction of the Durbin amendment within the post-2008 financial crisis Dodd-Frank bill.

Proponents of the Credit Card Competition Act, including Durbin, have claimed it will translate to savings for consumers. Nevertheless, a study by the Federal Reserve Bank of Richmond found that retailers did not see savings after the Durbin amendment took effect.

“Check your wallet, keep your rewards, and watch out for any actions that threaten access to credit and reward points, as well as the security of your payment systems,” Hunt cautioned.