CUNA and other trade associations representing the financial services industry released the following joint statement opposing legislation by Sens. Roger Marshall, R-Kansas, Dick Durbin, D-Ill., creating new credit card routing mandates that would eliminate funding for popular credit cards rewards programs, weaken cybersecurity protections, and reduce access to credit for those who need it the most:
“Despite vigorous lobbying efforts from Walmart and Target, Congress chose not to take up the ‘Big-box Bill’ last year because it was deeply unpopular legislation — among both Democrats and Republicans. That has not stopped mega-retailers from pushing their allies in Congress to reintroduce harmful credit card routing mandates once again. This legislation hurts consumers by increasing costs, weakening payment security, harming financial institutions, reducing access to credit for those who need it the most, and ending popular credit card rewards programs.
“At a time when fraud prevention, cybersecurity, and digital innovation are more critical than ever, this deeply flawed legislation will undermine the significant safeguards and security that exist today to protect credit card payments. Walmart and Target want Washington to mandate that financial institutions route credit transactions to the cheapest networks — many of which have underinvested in their platforms with little concern for security innovations — leaving the burden on consumers, small businesses, and financial institutions to clean up when things go wrong.
“Consumers exercise their choice to pick their credit card in a free market based, in large part, on the trust, security, benefits, and protections that these cards offer. Consumers expect that their choice will be honored. Having the government take this choice away from consumers, and give it to big-box retailers, is fundamentally wrong. This is the ultimate bait and switch, placing the risk of fraud and associated costs on consumers, their families, and their financial institutions.
“The US has the safest, most convenient, and most customer-friendly payment system in the world — and that's because financial institutions, networks, and merchants each pay their fair share to maintain it. If the big-box retailers get their way, American consumers will lose the credit card rewards they've earned and rely on to help pay for family vacations or dinners with friends and to put some extra cash in their pockets to cover the cost of gas and groceries. We saw this happen once before when Senator Durbin slipped debit card regulations into the Dodd-Frank Act in 2010, leading to the elimination of popular debit card reward programs and many free checking products. Meanwhile, the big-box retailers broke their promise to lower prices.
“The proposed legislation is a clear attempt to secure yet another financial windfall for the largest multinational retailers and e-commerce giants at the expense of the security of the payments ecosystem and reduced access to credit for American families with lower incomes. Consumers will pay the price, while many small issuers will be forced to exit the credit card business altogether. Senators Marshall and Durbin should not reengineer the entire payments system just to benefit Walmart and Target while causing smaller financial institutions and their customers to suffer.”