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2023 is going to end without US Congress acting on the widely-disputed Credit Card Competition Act after it failed to make it into the government’s omnibus spending bill.
The fact that the act was left out of the spending bill means that lawmakers will not discuss and vote on it before the current congressional session ends on January 3.
Senator Richard Durbin proposed legislation in July, which would require large issuers to enable dual routing on their credit cards and largely mirror the existing US debit card rules. A nearly identical bill was also introduced in the House two months later.
The proposals came after Visa and Mastercard changed their pricing, which was estimated to add around $1.2bn to merchant costs, despite continuous bipartisan pressure from senators to abandon the plans.
The bill appeared to be making headway in Congress as Senator Durbin pushed lawmakers to include it in the government’s defence spending bill, a must-pass piece of legislation that is often used by legislators to attach bills that would otherwise be hard to pass.
The Credit Card Competition Act, however, could not make it into the defence spending bill and, as the text of the recently published omnibus spending bill shows, neither was it included in the combined appropriations bill.
Small victory for the banks
The Credit Card Competition Act was designed to reduce prices by opening up competition for processing payments on credit cards, rather than via an interchange fee cap.
As reported by VIXIO, dual routing is considered by some to provide a better way to rein in acceptance costs to merchants and increase competition as opposed to an outright price cap.
Although the proposals had been cheered by merchants, these latest developments will be a welcome Christmas present for the American Bankers Association (ABA) and other financial services organisations who have lobbied against it from the start.
“The ABA and other trade groups opposed the Durbin-Marshall bill since its inception and, along with state banking associations, urged bankers to contact their lawmakers and explain how the legislation would harm both community banks and consumers,” the banking lobby group commented.
According to the bankers, the bill represented anti-consumer legislation that “would reduce choice, jeopardise consumer data security, and eliminate travel points and other popular credit card rewards programs”.
“As awareness of the bill has increased, so too have the organisations opposed to it, including military banking organisations, the major airlines and leading travel experts.”
The ABA said it will continue to actively oppose the legislation and any effort to revive it in the next Congress.
Although Congress did not act on the bill this year, merchants remain optimistic.
“With consumers and small businesses increasingly calling on Congress to do something about skyrocketing swipe fees, the question isn’t if this bill will pass but when,” Doug Kantor, MPC executive committee member and National Association for Convenience Stores general counsel, told VIXIO.
“Support is quickly building on both sides of the aisle and passage is inevitable,” he said, stressing that “lawmakers know swipe fees are out of control and driving up prices for American families at a time when they can least afford it”.
