Credit Cards Come at a Cost to Hoosiers
There’s a common theme in Indiana politics. If Illinois, Colorado, or California advocate for or have pursued a specific policy or legislation, Hoosiers steer clear. Under the current White House administration and governance, this theme sadly also pertains to our nation’s capital and the dangerous policies being pushed in Washington.
One of those policies, the Credit Card Competition Act (CCCA) or “Big-Box Bill,” is depicted as a policy promoting market competition. At this point, you may be asking why I would care about or oppose such a topic. After all, competition is a pillar of a free-market economy and increases innovation and productivity. All Hoosiers across our state should be concerned with the CCCA and its façade.
Introduced by Democrat Senator Dick Durbin of Illinois, the bill would enact harmful credit card routing mandates by allowing big-box retailers, like Walmart and Target, to process credit card transactions based solely on what is cheapest for them.
Under the CCCA, consumers would be prevented from choosing an electronic payment system that works best for them and best suits their consumer needs. This would add billions of dollars to mega-retailers bottom lines every year, eliminating most of the funding for popular consumer credit card rewards programs. These programs are worth $50 billion annually to U.S. consumers and are a valuable tool for all Hoosiers, especially low-income households and small businesses with credit cards.
Moreover, the bill would weaken cybersecurity protections by exposing consumers to less secure networks and eliminate access to credit by reducing revenue for smaller community banks and credit unions.
The original Durbin Amendment passed in 2010 and applied to debit cards, has failed consumers, small businesses, and credit unions for far too long. Following the bill’s passage, these retailers and convenience stores promised to pass savings on to consumers. That did not occur.
At the same time, retailers have increased consumer prices instead of lowering them since implementing the Durbin amendment. Approximately 22% of retailers have raised consumer prices, while only 1% lowered prices. The putative benefits of the Durbin amendment for consumers failed to come to fruition. Prices could be raised again if the Durbin amendment is applied to credit cards. The last thing lawmakers should pursue is legislation that would increase consumer prices.
If history is to repeat itself, we can expect similar outcomes to those of Senator Durbin’s most recent effort. Federal lawmakers across our state should take steps to encourage continued investment in the electronic payments industry.
Doing so will better position Indiana’s Main Street businesses to thrive, ensuring the state’s economy remains resilient and flourishes in a modernized marketplace. The hard-working citizens of Indiana deserve better than what this policy will provide if passed.