Op-Ed: Stop trying to make the Credit Card Competition Act happen

Original article can be found here.

Millions of credit card consumers have a simple request for lawmakers: stop trying to make theCredit Card Competition Act(CCCA) happen. Introduced by U.S. Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), this odious piece of legislation would mandate that card issuers allow merchants to use more payment networks when processing credit card transactions – blowing up credit card reward programs in the process.

But in a move straight out of the Burn Book, Sens. Cynthia Lummis (R-Wyo.) and Bernie Moreno (R-Ohio) recently became the legislation’s co-sponsors because they reportedly wanted to settle a score related to the pro-crypto Clarity Act. The merits of that legislation aside, holding credit card rewards for millions of families hostage in a beltway brawl is petty and unbecoming behavior for a lawmaker. Sens. Lummis and Moreno should ditch the CCCA and fetch consumers a well-earned break.

Despite the claims of proponents, Sens. Durbin and Marshall’s proposed credit card regulations would do nothing to “level the playing field” or help consumers or retailers. However, they would unleash a cascade of unintended consequences, ranging from the dismantling of popular rewards programs to heightened fraud risks for consumers. If these credit card mandates are enacted into law, millions of cardholders will pay the price – and bear bolstered risks.

To grasp how these mandates endanger consumer perks, one must examine the core intent of the CCCA. Sens. Durbin and Marshall’s goal is to curb the influence of major payment networks – the critical infrastructure linking merchant transactions to issuing banks – which they view as overly dominant. To shrink these networks’ footprint, the CCCA would require card issuers to integrate smaller, potentially less secure processing networks.

The fundamental flaw in this approach lies in how the current payment ecosystem functions: standard interchange fees directly fund the cash back, miles, and rewards that consumers depend on. Disruption to this financial structure would inevitably cause valuable rewards programs to vanish.

As NerdWallet writers Sara Rathner and Kenley Young note, “If you’re a committed credit card rewards optimizer sitting on a pile of points and miles, the possibility that the Credit Card Competition Act would pass is likely making you sweat. A major concern is that with reduced income from swipe fees, credit card issuers will cut back on their rewards programs and partnerships with airline loyalty programs.”

Plenty of Americans are understandably concerned. There are more than 31 million U.S. airline credit cardholders, and more than 15 million domestic trips are awarded and earned through airline credit cards each year. Overall, an astounding 190 million Americans have credit cards, and rewards cards are “the most common type of card, accounting for 92 percent of general-purpose card purchase volume. Among rewards cards, cash back became the most common, accounting for 36 percent of the total number of general-purpose card accounts.” Misguided mandates would undoubtedly make the majority of Americans worse off.

The CCCA would also compromise Americans’ financial safety by targeting the card networks that have the most rigorous anti-fraud programs. According to the Congressional Research Service, “To the extent that the major networks invest in making their infrastructure secure in order to attract customers and profits, if cards are effectively required to be interoperable, networks may be less willing to invest as much in secure payment technologies, as part of the benefit would accrue to their competitors.”

Additionally, when routing decisions are driven primarily by cost, more transactions could be routed onto networks with weaker risk controls, fewer security investments, and less rigorous dispute-resolution systems.

The CCCA would be terrible news for consumers. Fraud is already a problem in financial services markets, and identity theft poses a constant threat to consumers. Credit card fraud cost consumers $275 million in 2024, up from $45 million in 2015. Less than 10 percent of phony charges involve stolen or lost credit cards; the rest involve remotely accessed account information and personal data. This remote theft will become far easier for cyber-criminals if credit card mandates compromise network security. And, as the world becomes increasingly digitized, so does the risk of financial and identity theft in the digital domain.

Financial crime is devastating enough as a fraction of a percent of all purchases. Compromising credit card networks through mandates would increase that percentage, making millions of Americans think twice before swiping or tapping their cards.

Sens. Lummis and Moreno have made a bad mistake in co-sponsoring the CCCA. But they still have time to reverse course, stand with rewards holders, and be the cool (not to mention responsible) kids on Capitol Hill.