Congress considering credit card bill that would throw holiday plans into reverse
The holidays are a time when millions of Americans travel to spend time with family and friends or splurge on a gift for a loved one — and many cash in on the credit card rewards they’ve earned all year to help pay for it. This holiday season will be no different, especially as inflation has made everyday purchases more expensive, and tens of millions of Americans will again turn to credit card points to reduce costs.
According to a recent Bankrate survey, nearly one in four holiday travelers will use rewards to fill up the tank on a family road trip, help pay for a special holiday purchase, or book a ticket to see their loved ones.
Using points may be the difference between being able to afford to see their family or staying at home. They’ve been able to accumulate those points all year long by relying on high-value rewards cards that operate on secure, hassle-free transaction networks and are expecting to use them.
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As we approach the holiday season, now is not the time to pull the rug out from everyday Americans.
But some members of Congress are supporting a bill that would defund the programs that make credit card rewards possible and strip away the funding that provides a hassle-free, secure payment experience for both you and the stores you visit. They say they want competition even though a similar effort with debit cards ended up costing consumers more money, not less. The only group that benefitted were big corporate megastores which pocketed the money at the expense of rewards programs and card security.
Today, these megastores make a 1 to 2 percent investment when you use your credit card. Payment networks and card issuing banks use those investments to support data security, programs for rewards, innovation, and more. This includes rapid alerts that let you know someone may be trying to use your credit card for theft or fraud.
If the new mandates in the Durbin-Marshall interchange bill are enacted, the peace of mind Americans enjoy with credit card transactions could be over as we know it. The bill would require credit card transactions to be processed on at least two networks, with one of them being a smaller, less well-known entity — many of which haven’t invested in the financial security systems needed to protect consumer information.
The legislation would also throw the growing travel industry into reverse. The shops and workers who support tourism and business travel that have finally rebounded from the pandemic would lose many customers.
The bill’s chief sponsors, Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), know better. We know what will happen because in 2010, Congress passed a Durbin bill as part of the Dodd-Frank Act that capped prices for debit card transactions. This ended by costing consumers more, not less.
In addition, debit card rewards programs disappeared. Today, virtually no debit rewards cards exist.
Now big corporations like Walmart and Target — who have a history of data breaches — are again trying to convince Congress that satisfying their corporate greed is more important than keeping Americans safe from credit fraud. They would rather pocket more cash than make sure that Americans can safely shop for everyday essentials or redeem credit card rewards.
This bill would have disastrous consequences for consumers and the economy. Congress should abandon this legislation so Americans can shop worry-free, get home for the holidays to be with their families.
Richard Hunt is Executive Chairman of the Electronic Payments Coalition.
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