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The Credit Card Competition Act: What It Means for You Right Now

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Victoria M. Walker
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Victoria M. Walker

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Victoria holds a B.A. in Broadcast Journalism from the Howard University School of Communications and is an award-winning journalist, travel reporter, and the founder of the “Carrying On with Victoria...
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There’s been a lot in the news about Congress and the potential impact on your credit card rewards. But what’s going on, and what does it mean for you?

Let’s dive right in.

What Is the Credit Card Competition Act?

The Credit Card Competition Act (CCCA) of 2023 is a proposed bill in Congress aimed at lowering credit card swipe fees.

Before we dive into the meat of the proposed law, let’s take a look at how these fees work.

When you swipe your credit card at a merchant — be it a big box retailer or your local bodega — that merchant pays a credit card transaction fee.

Generally, these fees are roughly 2% or 3% of the goods or services you purchase. That means if you paid $1,000 for an item, the merchant would receive between $970 and $980 after processing fees.

The bill would make the 4 largest financial institutions that issue credit cards — Visa, Mastercard, American Express, and Discover — offer merchants the option of using 2 routing options to process payments instead of 1.

Additionally, the bill would require that 1 of these be a network other than Mastercard or Visa, accounting for 83% of general-purpose credit cards.

Lobbying groups representing merchants say that these fees are usually their highest operating costs after labor and say that eliminating these fees would make them more money.

Part of the swipe fee includes what’s known as an interchange fee, which is the fee between the cardholders’ bank and the merchant’s bank. And interchange fees are what back credit card rewards programs, including points, miles, and cash-back.

Those critical of the bill have said that credit card rewards, taken advantage of by millions of Americans to pay for trips or cover purchases, might be severely curtailed — or eliminated altogether.

Additionally, the bill’s detractors have also said that it would be much more difficult for marginalized groups to access credit and that the financial system would be less secure.

Who Is Sponsoring the CCCA?

In the Senate, the bill is being sponsored by Majority Whip Dick Durbin (D-Ill.), along with U.S. Senators Roger Marshall (R-Kan.), Peter Welch (D-Vt.), and J.D. Vance (R-Ohio). Similar legislation has been proposed in the U.S. House of Representatives by Representatives Lance Gooden (R-Tex.) and Zoe Lofgren (D-Calif.)

Marshall initially said he planned to attach the proposed legislation to the National Defense Authorization Act (NDAA), which authorizes how the U.S. Department of Defense can spend money. However, it wasn’t attached to the bill, which passed the House and Senate. Congress broke for August recess on July 27, and both Houses won’t reconvene until mid-September.

If Durbin’s name sounds familiar, it’s because of the Illinois senator’s amendment to the Dodd-Frank Act — known as the Durbin Amendment — back in 2010.

The Durbin Amendment required the Federal Reserve to limit fees charged to retailers for debit card processing. Like the CCCA, merchants heavily lobbied for the amendment, while banks and other issuers lobbied against it. But under the Durbin Amendment, consumers saw the all-but total elimination of debit card rewards, which opponents of the bill say would happen again if signed into law. Though parts of Dodd-Frank have since been rolled back, debit card rewards have not returned.

Opponents of the bill say they want to prevent what happened to debit card rewards from repeating itself with credit card rewards.

Bottom Line:

This isn’t the first time Sen. Durbin or Rep. Gooden have proposed this bill. Nor is it the first time it’s been attached to the NDAA and then subsequently removed. The Credit Card Competition Act of 2022 was proposed but then died in the House and Senate.

What’s Going To Happen To My Points and Miles?

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Right now, nothing. Both the bills in the House and Senate have merely been proposed — nothing’s been passed yet. You can continue to use your points and miles as usual.

Of course, the credit card and financial industry won’t go down without a fight and have also been lobbying against the bill.

Hands Off My Rewards is a petition by the Electronic Payments Coalition, which includes major players such as Visa and Bank of America. The ECP says the bill would “eliminate the funding” that goes towards credit card rewards programs, such as cash-back and points.

“The financial services industry stands united in opposition to Senator Marshall’s effort to hold up funding for our military in order to gift a massive government handout to Walmart, Target, and other big-box retailers,” the ECP said in a statement in late July. “Senator Marshall’s credit card routing legislation has no relevance to defense spending whatsoever. We call on Senator Marshall to promptly abandon his effort to use the NDAA to secure government favors for big-box retailers at the expense of consumers, small businesses, and small financial institutions.”

A rep for Sen. Marshall’s office told Upgraded Points that CCCA “will not have another amendment process after it gets out of conference.”

“Last week, we were given assurances that the Credit Card Competition Act will be given a vote this Congress,” Sen. Marshall told Upgraded Points via email. “Swipe fees, the Visa-Mastercard duopoly, and the Wall Street banks that back them are price-gouging American families nationwide at a rate 7 times higher than the EU. That will soon end. We will inject competition into the credit card market, without price controls, and help our MainStreet businesses and consumers.”

In the meantime, Hands Off My Rewards has the option to send a pre-written email opposing the legislation.

“Consumers like me will pay the price as we watch our favorite cash back and travel rewards programs disappear. Please help protect our rewards programs and oppose all credit card routing mandates and oppose the Credit Card Competition Act,” part of the email reads.

Bottom Line:

So far, the banks have been keeping mum about the bill, instead directing media inquiries to the ECP. However, a source familiar with a major U.S. bank’s thinking told Upgraded Points that the company had multiple income sources, though the brunt of the bill, if signed into law, could see an increase in consumer fees.

What Will the Biden Administration Do?

It’s unclear what President Joe Biden will do, assuming that the bill passes the House and Senate, which it hasn’t. But he has made no secret about his disdain for fees.

Biden went after so-called junk fees (though not exclusive to the travel or finance industry), as we reported last fall. During his State of the Union last January, he announced a plan to ban hotel “resort fees” and cap service fees from tickets or sporting events.

And under the Biden Administration, the U.S. Department of Transportation proposed a rule that U.S. and foreign airlines would have to make their policies about baggage, change, and cancellation fees clearer to customers before booking their tickets. This means airlines would be required to show what extra fees travelers would have to pay the first time a ticket price is displayed. 

Final Thoughts

Points and miles enthusiasts are closely monitoring the Credit Card Competition Act. While frequent flyers and travelers can continue earning points and miles as usual, travelers with a strong opinion about the bill should continue to monitor the 2023 Congressional Calendar.

Victoria M. Walker's image

About Victoria M. Walker

Victoria holds a B.A. in Broadcast Journalism from the Howard University School of Communications and is an award-winning journalist, travel reporter, and the founder of the “Carrying On with Victoria M. Walker” newsletter.

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