Thursday, December 15, 2022
"Millions of American families and businesses rely on their credit card benefits for travel, dining, shopping and cash back," said Gentry Collins, CEO at American Free Enterprise Action, or AmFree Action. "The Credit Card Competition Act would strip American consumers of billions of dollars a year in benefits – resulting in less travel and less spending. It will also hurt the millions of American small business owners and local towns that rely on these benefits the most."
The Credit Card Competition Act was penned by Senators Dick Durbin, D-Ill., and Roger Marshall, R-Kan., ostensibly to force down merchant processing fees through competition in the form of merchant network choice.
The largest credit card issuing banks (those with assets over $100 billion) would be required to offer merchants a choice of at least two unaffiliated payment processing networks for the processing of their credit card payments, and only one of those networks can run by Visa or Mastecard.
Similar legislation was also introduced in the U.S. House.
Sens. Durbin and Marshall attempted to push the measure through Congress in September 2022 as an amendment to a defense bill. But the move was shot down. With only a few weeks left in the current Congress, both the House and Senate versions of the bill die, and will need to be reintroduced in the Congress that begins in January.
AmFree Action presupposes the legislative battle will continue in 2023. It's seven-figure campaign has three unique ads running now on platforms like Hulu, Roku and You Tube, and various social media platforms. Two are 30-second spots set in the fictional town of Point Less, Kansas, and depict various life scenarios impacted by the elimination of credit card points, including an airport and hotel void of travelers. "Would you want to live in a world without points?" the narrator asks.
A longer commercial is titled Pointless America, and provides additional examples of the economic struggles that could ensue with passage of the legislation. Viewers are directed to a website (welcometopointless.com) that explains how legislation like the Credit Card Competition Act would threaten popular card rewards programs. "American consumers could lose more than $50 billion a year in benefits," AmFree Action states in the ad.
AmFee Action describes itself as a think tank and advocate of public policies that "protect and expand American Free Enterprise."
In a related development, the Electronic Payments Coalition published an "explainer" that analyzes retailers' payment processing costs and shoots holes in arguments that interchange fees are one of the highest costs facing small businesses today.
The EPC, which is a Washington-based lobbying group for certain financial institutions and payment card networks, said its analysis indicates "merchant discount fees likely account for 1-3 percent of total costs for small businesses that accept credit and debit cards. Not only are these costs minimal in the grand scheme of a business's operating costs, but the myopic focus on costs ignores the reality that accepting card payments providers significant benefits to small businesses."
According to the EPC, the average restaurant has a profit margin of 3 to 5 percent, which suggests costs represent 95 to 97 percent of total revenue, and the group's analysis suggests card processing fees account for about 1 percent of total costs.
One "real world" example the EPC provided was gleaned from tax records for a New Jersey restaurant and covered the period from 2018 to 2020. The tax records include a line item for "credit card processing" (which is assumed to refer to the merchant discount fees) and a separate line item for "bank fees" (which are assumed to include debit card processing fees). Combined the two line-items accounted for 2 percent of the restaurant's total annual reported costs, the EPC said.
The analysis, titled EPC Explainer: Why Congress Should Oppose the Credit Card Competition Act is available at electronicpaymentscoalition.org/resources/epc-explainer-why-congress-should-oppose-the-credit-card-competition-act-2/ . 
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