PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Credit Competition Act Creeps Into 2023

Sophia Gonzalez by Sophia Gonzalez
January 5, 2023
in Analysts Coverage, Credit
0
Credit Card
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The Durbin Amendment of 2010 regulated interchange fees for debit cards issued by banks with $10 billion or more in assets in the U.S. Mercator research covered the aftermath of this regulation, stating there are complexities. The alleged benefits of the regulation, including cost savings passed from merchants to consumers, have not panned out in the past 12 years. 

Though there is ongoing debate around the alleged benefits of 2010’s Durbin Amendment on debit cards, Senator Dick Durbin has continued to turn his head towards regulating credit cards next. The Credit Card Competition Act was first introduced in July 2022 and was positioned to follow the same regulation set forth in 2010. The regulation requires two unaffiliated networks to be supported by each payment card, thus supporting market competition and placing a spending cap on interchange paid by merchants to issuers.

It is important to note one of the major differences between credit and debit cards: rewards. Issuers utilize interchange revenue to afford paying out rich rewards to consumers. If interchange revenue paid to issuers is regulated and reduced, there is a very significant chance issuers would reduce or eliminate all credit card rewards. Consumers lose in the end.

Senator Dick Durbin claims that issuers receive more than enough revenue to cover credit card reward programs.

Proponents of the Credit Card Competition Act Have Grit

The Credit Card Competition Act’s proposal to the Senate last summer did not win legislative support. Following the same trend, the Credit Card Competition Act was introduced to the House of Representatives as a bill in September 2022 and did not win support. The Merchant Payments Coalition then attempted to run an ad campaign during the World Cup—which is largely sponsored by major card processing network Visa—to grab attention.

With another failed attempt of gaining support, supporters of the Credit Card Competition Act then hoped to attach the credit regulation to a major defense spending bill that needed to be passed in 2022. It is unclear what credit cards have in common with a National Defense Authorization Act. It comes off as a sneaky attempt to get support on the Credit Card Competition Act by attaching it as an amendment to a completely unrelated Act that is posed to be approved. It is a stretch, but Senator Durbin stated sometimes veterans have to pay a surcharge at military commissaries for card payments. The U.S. Defense and Treasury were called to issue a report on just how much veterans are paying in credit card surcharges. The attempt to attach the Credit Card Competition Act to the National Defense Authorization Act was not successful.

According to Yahoo Finance, congress voted on the Credit Card Competition Act last month in a last-minute attempt to get it passed in 2022. Another failure to gain support coupled with the grit of Senator Dick Durbin promises the Credit Card Competition Act will continue to be pushed this year.

Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.

Tags: Credit CardsCredit RewardsDebit CardsDurbin AmendmentregulationSenator Durbin
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    eCommerce On Social Media, social commerce

    The Rise of Social Commerce and Social Payments

    February 3, 2023
    Electroneum AnyTask; ETN Crypto, sales enablement

    Ethical Financial Selling: The Role of Compliance Technology and Sales Enablement

    February 2, 2023
    direct deposit

    Nacha Launches Campaign to Reach Millennials on the Benefits of Direct Deposit

    February 1, 2023
    Equinix Helps UK-Based Payments Provider Enable Faster, More Reliable Payments Processing

    Equinix Helps UK-Based Payments Provider Enable Faster, More Reliable Payments Processing

    January 31, 2023
    credit card tumbling

    How to Detect, and Prevent, Credit Card Tumbling

    January 30, 2023
    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    January 27, 2023
    faster payments

    Faster Payments Are Set to Revolutionize Modern Digital Payments

    January 26, 2023
    How AI can Help Manage Payments Risk in 2023

    How AI can Help Manage Payments Risk in 2023

    January 25, 2023

    • Advertise With Us
    • About Us
    • Terms of Use
    • Privacy Policy
    • Subscribe
    ADVERTISEMENT
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • News
    • Resources

    © 2022 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the Equinix report - Dojo Delivers Fast, Reliable and Secure Card Payments to Businesses on Platform Equinix