Richmond Leader

Three leaders in the Virginia banking and credit industry, Matt Bruning, Steve Yeakel, and JT Blau, said the proposed Credit Card Competition Act would "negatively impact popular credit card rewards programs" among other harmful impacts. 

"The innocent sounding 'Credit Card Competition Act' (CCCA) adversely impacts the competitive credit card market," Bruning, Yeakel, and Blau wrote in a recent op-ed. "If the CCCA passes, the government can write new regulations on how credit card transactions are routed, removing consumer choice and allowing retailers to pick less secure networks instead of the established networks used today."

"This bill will also negatively impact popular credit card rewards programs," they wrote.

Bruning is the executive vice president of government and member relations at the Virginia Bankers Association. Yeakel is the president and CEO of the Virginia Association of Community Banks. Blau is the chief advocacy officer at the Virginia Credit Union League.

The “Credit Card Competition Act”, S. 1838, would require banks to offer merchants at least two network options, one of which cannot be Visa or Mastercard, for processing credit card transactions. 

Glenn Grossman, the director of research at financial advisory firm Cornerstone Advisors, said S. 1838 could also lead to an increase in credit card fraud, reported Old Dominion News on April 25.

“If the CCCA were to be approved the routing of credit card transactions would move from a ‘single pipe’ to ‘multiple pipes’ of data flowing from merchants to issuers,” said Grossman. “Today, card issuers depend on the networks to profile and identify fraud.”

“They see all the transactions on their network and have developed fraud detection capabilities that would not be possible in a fragmented structure the CCCA would create,” Grossman said. 

Bruning, Yeakel, and Blau said "the government should not mandate how credit card payments are processed. It takes choice away from consumers and puts customers and businesses at greater risk of fraud."

"Instead of allowing customers and financial institutions to continue to choose the most secure protections on their credit cards, the CCCA will allow retailers to pick how the payments are routed," they wrote. "Mega retailers will opt for the less secure option, compromising the security of their customers’ financial information to grow their own profits."

The bill applies to credit cards what a similar measure in 2010, often referred to as the “Durbin Amendment,” applied to debit cards. The 2010 measure was a requirement of the “Dodd–Frank Wall Street Reform and Consumer Protection Act.” 

A 2014 George Mason University study found that the 2010 “Durbin Amendment” led to a 50% reduction in the number of “fee-free” accounts offered by banks between 2009 and 2013, and doubled average monthly fees on “non-free” current bank accounts. 

The study also said the measure resulted in an increase of 1 million "unbanked" Americans in the year after the measure was enacted. 

The bill is currently pending in the U.S. Senate Committee on Banking, Housing, and Urban Affairs.