Healthy competition is generally thought to be good for all involved, but not everyone agrees when it comes to recently introduced federal legislation. H.R. 8874, introduced in the United States House of Representatives on September 19, 2022, and S. 4674, introduced in the United States Senate on July 28, 2022 are identical bills known as the Credit Card Competition Act of 2022 (CCCA). The CCCA promotes competition in credit card processing by allowing businesses to choose between multiple networks when running transactions. Additionally, the networks available for a transaction cannot be exclusive to the two largest network providers, currently Visa and Mastercard. The goal is to save money for consumers and business owners by creating competition and thereby reducing interchange fees.
Passage of H.R. 8874, S. 4674, or both, are not a certainty, however. While introduced on a bi-partisan basis, the end of the legislative session is fast approaching and there is opposition. Of course, the largest card networks are opposed. More importantly, there is concern about unintended consequences to the consumer, much like what was seen with the Durbin amendment to the Dodd-Frank Act in 2008 capping certain debit transaction interchange rates. The specific concern is that a reduction in fees through forced competition will work against the consumer with an increase in other fees or the elimination of beneficial rewards programs. Merchants, on the other hand, are near certain winners. They will be able to choose the lowest interchange rate and decide between retaining those savings or passing them on to the consumer.
While the fate of the CCCA is unclear, we will be watching closely.
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