With Congress set to return from recess next week, there is plenty of concern about where it might set its sights. The stalemated Congress sprang to life with quick passage of the “Inflation Reduction Act” just before recess, opening up the possibilities of action on major issues like Overdraft Reform, the authorization of a Central Bank Digital Currency and expansion of interchange price-fixing to credit cards, via the Credit Card Competition Act of 2022 (S.4674).
In a recent blog post, ICBA President and CEO Rebeca Romero Rainey outlines several factors that make the Credit Card Competition Act of 2022 (S. 4674) both cost prohibitive and impractical to implement, including:
- Operational considerations related to developing the infrastructure to support multiple dual message networks, which would require card-issuing institutions to contract with a debit card network to process credit card transactions and would trigger extensive system changes at significant expense;
- Increased security risks and fraud as a result of allowing merchants to choose their authentication method (regardless of whether it was the most secure). Merchants would also be less incentivized to innovate if card issuers no longer control which network processes their card transactions; and
- Harmful consumer impact by way of higher fees, reduced access to credit cards, particularly among low- to moderate-income consumers, and the elimination of rewards programs.
As conditions continue to develop, please pay close attention to IBAT communications to see how you can engage on this and other issues of importance to community banks.