FELLOWS: Mississippi consumers will pay the price of federal credit card mandate | Mississippi Politics and Current Affairs


Submitted by Gordon Fellows, President and CEO of the Mississippi Bankers Association

The Credit Card Competition Act will not increase competition, but it will hurt consumers, businesses and banks, writes the president of the MS Bankers Association.

Families in Mississippi already face exorbitant prices at the gas pump, the grocery store and almost everywhere in between. So why are Washington big-box retailer lobbyists pushing Congress to make payments system changes that will hurt Mississippi consumers and our community banks? It might defy common sense, but that’s exactly what the proposal championed by Sen. Dick Durbin (D-IL) and Roger Marshall (R-KS), known as the Credit Card Competition Act, will do. of 2022.

The Credit Card Competition Act of 2022 gives the government power over the US credit card system by placing a federal mandate over card networks and payment routing. The bill’s authors claim it will limit the small fees merchants pay when they accept credit card transactions. But this ill-conceived legislation is just an attempt to “double our efforts” on a policy that we already know has failed.

The infamous Dodd-Frank bill and accompanying Durbin Amendment have already hurt community banks and consumers in our state. Changes imposed by the Durbin Amendment on debit card transactions forced banks to abandon popular free checking accounts and debit card reward programs and made it more expensive to protect vulnerable consumer data from cybercriminals . The Durbin Amendment was sold to Congress as a way to save consumers money, but more than 10 years later the savings predicted for consumers have yet to materialize as free verification has all but disappeared. and that the costs of cyber protection have increased!

But now Senator Durbin and his colleagues want to extend those expensive warrants to credit cards, and they’re trying to circumvent the normal legislative process to potentially speed the bill through. It is being proposed as an addition to a defense spending bill, which is due to be heard in the Senate next week. It could go very quickly, and it’s a similar tactic Senator Durbin used in 2010 for the original Durbin Amendment.

If this proposal becomes law, it will force local Mississippi banks to pay the huge cost of rewiring credit card processing – and adding new costs during a time of such high inflation will continue to strain Mississippians’ finances. daily. In addition to increasing costs, the expansion of the Durbin Amendment will remove consumers’ ability to choose which credit card network to route transactions and give that choice to large retailers instead.

So even if a cardholder likes the points program, free rental car insurance, cash back, or any other features or benefits they receive from that card, if a retailer decides to use a competing network , the consumer will lose access to these benefits. This column of The dot guy goes into more detail about the potential loss of credit card benefits.

If it becomes law, this proposal will significantly harm consumers in several ways. First, it will force banks to contract with multiple credit card routing companies, which will reduce a local bank’s ability to offer convenient and popular credit card products like cash back and rewards.

It will also force millions of people in Mississippi to regularly replace their credit cards, which will undoubtedly cause confusion and inconvenience, and possibly create additional pressure on chip supply. Finally, it would risk compromising consumer data security and fraud protection as merchants choose to route transactions over cheaper and less secure networks. Retailers, like any business, are drawn to the cheapest provider – and this proposal would allow retailers to route transactions through foreign networks like China’s Union Pay network instead of more secure card networks. The cyber risks to which this policy could expose thousands of Mississippians are potentially enormous.

So, who benefits from the Durbin-Marshall bill? Big box and online retailers. After the Durbin First Amendment imposed similar routing changes for debit cards, a Federal Reserve analysis found that the vast majority of merchants did not pass on exchange savings to consumers and some even raised prices. Now, with too many Mississippians under pressure from inflation, they want to call the same game with credit cards and burden consumers with the bill.

Washington lawmakers often miss the lessons of failed policies and too often repeat bad and costly ideas. This is certainly the case with the Credit Card Competition Act of 2022. It will not increase real competition, but it will hurt consumers, small businesses and community banks. Mississippians already face enough economic headwinds, now is not the time to expand this costly and failed policy.


Submitted by Gordon Fellows. He is president and CEO of the Mississippi Bankers Association.


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