The Credit Card Competition Act (CCCA): What’s at Stake

On June 7, 2023, several U.S. Senators and members of Congress introduced the so-called “Credit Card Competition Act” (CCCA) in both the House and the Senate. The proposed legislation is a direct threat to our electronic payments and rewards system and, if enacted, would have a major negative impact on our local businesses, entrepreneurs, and tradespeople who use credit cards. It would circumvent the competitive free market with a government “routing mandate” that dictates which processing networks banks can accept, without regard to security or quality.

Contrary to its name, the Credit Card Competition Act would not benefit competition in a meaningful way, because mega retailers with huge volumes of transactions are the only ones that would benefit from this proposal. The bill would allow them to avoid being controlled by network rules, letting them negotiate their way out of complying. Meanwhile, small businesses are unlikely to see any savings. With this drastic shift in the credit card market, rewards programs would be decimated and there would be an increased risk of reduced protections for local businesses, entrepreneurs, tradespeople, and consumers alike.

In 2010, Congress passed a similar provision that enforced price controls on debit card processing fees. However, studies have shown that this legislation only increased big retailer revenue, with little to no cost savings passed down to consumers. Instead, small businesses and consumers alike saw reduced availability of free checking, higher monthly fees, higher minimum account balances, and the disappearance of debit card rewards programs.

Frequently asked questions​

No. Mega retailers are powerful enough that they can go directly to payment processing networks and negotiate deals with them for lower rates. For every credit card transaction happening in their stores, they would be able to choose whichever network would give them the special low rate. Locally owned, small businesses do not have the same choice, and they cannot go directly to payment networks and negotiate deals. 

Yes, but the exemption would not work. When similar debit card legislation passed in 2010, it created an industry wide impact. A 2017 study by the Federal Reserve found that the negative consequences of routing mandates were felt by both regulated and exempt financial institutions.

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