Durbin not backing down on card routing bill

Senator Richard Durbin, D-Ill., is determined merchants should get a say in which networks are used to process their credit card payments. He has mustered bipartisan support for the Credit Card Competition Act, which was introduced in June and requires merchants get network choice.

Last week he proposed adding the bill as an amendment to a must-pass defense funding bill. The maneuver failed. But Senator Roger Marshall, R-Kan., lead co-sponsor of the bill, said in a July 26, 2023, statement the sponsors "were given assurances that the Credit Card Competition Act will get a vote in this Congress," which runs through 2024. This is no surprise, since Sen. Durbin, as the second most powerful Democrat in the Senate, helps determine which bills come up for votes on the Senate floor.

First introduced in the last Congress, the Credit Card Competition Act would require the largest banks ($100,000 or more in assets) to make the credit cards they issue usable on at least two processing networks, only one of which can be owned by Visa or Mastercard. Sen. Durbin said the bill builds on the landmark 2010 legislation which regulated debit card interchange and bears his name.

"This legislation, which builds upon pro-competition reforms Congress enacted in 2010, would give small businesses a meaningful choice when it comes to card networks, and it would enable innovators to gain a foothold in the credit card market," Durbin said in a statement.

A companion bill was introduced in the House, by Representatives Zoe Lofgren, D-Calif., and Lance Gordon, R-Texas, and several other Democrats and Republicans in the House have signed on as co-sponsors. To date, neither the House nor the Senate has held hearings on the bill.

The typical route to passage for any Congressional legislation is for public hearings and voting at the committee level before it is brought up for votes by the full House and Senate. However, the website Political reports that sources close to Durbin say he is determined to attach the bill to any amendable legislation that comes up in the Senate—an indication that he plans to bypass committee consideration.

Banks, credit unions, line-up opposition

Opposition to the legislation has been swift and strong. The American Bankers Association and others began running social media and radio ads blasting the bill in Washington and in sponsors' home districts.

National trade groups representing banks and credit unions, and the Electronic Payments Coalition fired off a letter to leaders of the House and Senate urging them to reject what the group described as "this cynical manipulation of our nation's payments system for narrow financial gain for the nation's largest retailers." The letter explained how the legislation would:

• Hurt consumers by reducing the number of competing card issuers and limiting popular rewards programs.
• Wring out the competitive differences among card products.
• Eliminating consumer choice from the network decision process.
• Make it tougher for small banks and credit unions to compete for credit card business, because of the investments needed to accommodate network choice, and the hassle of reissuing their portfolios of cards to accommodate routing through multiple networks.
• Increase threats to consumer data and privacy.
• Lead to government "micromanagement" of private sector payment networks.

"Since the enactment of the Durbin Amendment in 2010, the financial services industry (comprised of institutions of all sizes and charters) has been clear, consistent, and in lockstep in our opposition to that destructive policy," the letter stated. "The Durbin-Marshall bill manages to take a bad policy and make it worse."

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