The American Bankers Association today joined seven banking and credit union trade groups in a joint letter opposing a House bill to create new credit card routing mandates. credit that would affect credit-issuing banks. The proposed legislation (H. 8874), introduced by Reps. Peter Welch (D-Vt.) and Lance Gooden (R-Texas), would require covered credit card issuers to add a second network to their customers’ cards, but banks only be allowed to choose from certain options set by the Federal Reserve. In their letter, the groups said the legislation circumvents the free market to award private sector contracts to a small number of payment networks to boost the profits of the largest e-commerce and multinational retailers.
“Far from increasing competition in the credit card market, this legislation will harm consumers and benefit big-box retailers by reducing the number of credit card issuers competing for consumer business, removing choice of the consumer-preferred card network, eliminating competitive differences between card products, limiting popular credit card rewards programs, and placing the nation’s private-sector payment system under the micromanagement of the Federal Reserve Board,” said said the groups.
The Welch-Gooden bill is similar to the anti-ABA legislation presented by the Senses. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.). Similar to the Senate proposal, the groups said the House bill duplicates the errors of the 2010 Durbin Amendment on debit cards, which has led to a decline in the availability of low-cost banking services. and free checking accounts for consumers.
“There is no surer way to disrupt the economy of smaller credit card issuers than to enact this legislation, which will eliminate the already thin margins of low-volume issuers, forcing them out of the credit card market. credit and conceding the product category to bigger ones. companies better able to absorb these changes,” the groups said.