Credit Card Competition Act will not face a vote, despite threats from Judiciary Committee – The Points Guy

Based on Tuesday's ruling, the Credit Card Competition Act will remain stalled until the 119th Congress begins in January. Senate Judiciary Committee Hearing in washington d.c.

Senate Bill 1838 This would require credit card issuing banks to offer at least two networks to merchants processing electronic credit card transactions, leaving Visa and Mastercard functioning as a duopoly with the largest card market share. It will be banned. The bill claims that forced competition would lower the fees merchants charge consumers who use credit cards.

Sens. Roger Marshall (R-Kan.) and Richard Durbin (D-Ill.) will introduce bipartisan legislation in 2022, with Vice President-elect J.D. Vance and others joining the bill in 2023. It was reintroduced with support. Despite momentum from high-profile public support, including President-elect Donald Trump, the bill has remained largely stalled so far through 2023 and most of 2024.

The lack of movement since the bill's introduction did not stop the Senate Judiciary Committee from holding a final hearing on the bill this year. During the hearing, members primarily called on Visa and Mastercard to correct their practices before taking action in Congress.

Sen. Thom Tillis (RN.C.) reiterated his belief that the bill will not pass this Congress. He suggested that the bill would actually “cause more problems.” But he called on the two credit card companies to act independently before Congress intervenes.

“The solutions coming out of Congress are not going to be good for anyone,” he said Tuesday.

Tillis was supported by Sen. Josh Hawley (R-Missouri), who despite being a junior senator has earned a reputation as one of the most outspoken members of Congress. .

“This is not a sustainable solution,” he said. “I'm here to tell you that this is not okay.”

Hawley was the only lawmaker to propose an alternative to the bill. he carried on his back Previous proposals, including ones by both himself and Trump; Require credit card companies to cap interest rates to reduce the $1.14 trillion in debt owed by American credit card users. Reports on these initiatives, which are also proposed by Democrats, suggest that the credit card industry will oppose the bill, similar to the Credit Card Competition Act.

If the Credit Card Competition Act is currently up for a vote, Louisiana Republican Sen. John Kennedy said he doesn't know how he would vote, but that Congress will act somehow…eventually.

President Kennedy directly addressed representatives of Visa and Mastercard at the hearing and said there were two possible outcomes.

“When I'm done with you guys, you guys could be like the Post Office or the Dallas Cowboys,” he said. His office did not respond to a request for comment seeking clarification on his remarks by press time.

Critics, including Airlines for America, have warned that the bill would harm loyalty programs and other programs offered by affiliated credit cards.

Airlines for America is an industry group representing major North American airlines, including United Airlines, American Airlines, and Delta Air Lines. The company has launched an anti-legislative campaign highlighting this concern. Protect your points. (TPG is one of many organizations with a stake in this cause and has launched its own campaign, “Protect Your Points.” We work with the Electronic Payments Coalition to advocate for banks and institutions involved in the electronic payment process.

“This hearing was so blatantly biased and one-sided that it was bought and paid for by the campaign contributions of the nation's largest corporate megastores,” said Richard Hunt, executive chairman of the Electronic Payments Coalition. It effectively required a disclaimer that it was paid for and sponsored by the Bank of America,” said Richard Hunt, executive chairman of the Electronic Payments Coalition. Statement after the hearing.

In response to the bill's claim that competition would lower rates for consumers and small businesses, the group pointed to a Congressional Research Service report. Citing a lack of evidence that credit card routing mandates would result in savings for consumers, the report said the bill “has the potential to lower prices for consumers and support small businesses. “is low,” he concludes.

Critics of the bill in the financial industry regularly cite the Durbin Amendment, which would create a fixed fee for processing debit card transactions instead of a percentage fee based on the total amount of the transaction. The Durbin amendment is primarily due to limiting the benefits banks offer for debit card purchases, thereby eliminating most debit card benefits for consumers.

If history is any indication, credit card loyalty programs can fail as well. If frequent flyer programs are scaled back, airlines could respond to lost revenue by raising prices on traveler expenses, such as airfares.

“It turns out that most airlines make more money on credit card branded cards and frequent flyer programs than they do on airline operations,” Durbin noted. “This law will put them out of a living hell.”

Various tourism industry stakeholders have opposed the bill, warning that it could have a negative impact on tourism in the state.

“If passed, this bill would undermine the foundations of credit card rewards and loyalty programs that countless visitors to Florida and Floridians rely on to travel,” nine Miami-area officials wrote in a letter. Abolition could curb travel and tourism.” It was addressed to Florida Republican Sens. Marco Rubio and Rick Scott and was shared with TPG. These stakeholders include the Greater Miami Convention & Visitors Bureau, the Greater Miami & Beaches Hotel Association, and the Greater Miami LGBTQ Chamber of Commerce.

Supporters argue that the bill would improve competition within credit card exchanges, since Visa and Mastercard account for the majority of general purpose credit cards.

On November 18, the American Bankers Association took the lead. letter of opposition To Chairman Durbin and Executive Member Lindsey Graham (R-South Carolina). According to the letter, the bill “opens the door to fraud, hinders incentive programs, and limits the allocation of loans to individuals and small businesses.”

By contrast, Sen. Peter Welch, D-Vermont, said Visa and MasterCard fees are “crippling small businesses in the United States,” even though small businesses rely on Visa and MasterCard to process payments. '', he said at the hearing.

european union Capped exchange fee In 2015, it was 0.2% of transaction value for consumer debit cards and 0.3% for Visa and Mastercard consumer credit cards. Bill Sheedy, senior advisor to Visa's CEO, said this has resulted in the majority of its loyalty programs being eliminated or significantly devalued.

“These changes have been bad for European consumers due to higher fees and associated reductions in benefits,” he said. In fact, the credit card rewards landscape in Europe is much smaller than in the United States. Europeans have little access to high-value sign-up bonus credit and charge cards.