Joint ABA and State Bankers Association Letter to the House and Senate: Opposition to S.4674, H.R.8874, Credit Card Competition Act

Re:  Joint State Financial Services Associations Letter Opposing S.4674/H.R. 8874 & Expansion of Durbin Amendment Routing to Credit 

Dear Majority Leader Schumer, Minority Leader McConnell, Speaker Pelosi, and Minority Leader McCarthy: 

As state and national trade associations representing virtually all banks, we write to express our strong opposition to the so-called “Credit Card Competition Act of 2022” (S. 4674./H.R. 8874) in any lame duck legislation, including potential omnibus or continuing spending bills. Introduced by Senators Roger Marshall (KS) and Dick Durbin (IL) and Representatives Lance Gooden (TX) and Peter Welch (VT), this flawed legislation has no place in any appropriations bill. The Marshall-Durbin bill is a complex regulatory proposal that is opposed by community banks and military financial services organizations and has received no hearings and should be considered only through regular order. 

Far from increasing competition in the credit card marketplace, this legislation will reduce the number of credit card issuers competing for consumers’ business, wring out the competitive differences among card products, and decimate card rewards programs (e.g. airline miles and cashback) valued and commonly utilized by American families.  It will hurt our tourism sector and tourism-supported communities, which rely on travel funded by these rewards programs. And it will put the Federal Reserve Board in charge of our nation’s private-sector card payments system. 

The Marshall-Durbin bill achieves these ends by awarding private-sector contracts to a small handful of the sponsors’ favored payment networks in order to pad the profits of the largest internet and national merchants who, as Congress well knows, are raising prices on American families far more than the real rate of inflation. As you are aware, in a recent hearing on proposed grocery chain consolidation held by the U.S. Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights, a bipartisan group of senators expressed serious concerns over the steep price increases Americans are facing at food retailers. As Senator Mike Lee stated, “Inflation, to put it gently, is wreaking havoc on our entire economy but not on the grocery industry, it appears.” 

These rocketing profit margins at a time of difficulty for American consumers go to the heart of the disingenuous Marshall-Durbin bill campaign waged by major retailers, including the national grocery chains, biggest online sellers, and big boxes.  All of them have argued that big retail faces so many challenges that credit card fees make the difference between staying open or not. This is far from true. These retailers are making record profits and one grocery store chain recently tried to disburse a $4 billion “special dividend.” The largest food and merchandise retailers have come through the pandemic in better shape than virtually any industry. Their claims of “thin profit margins” do not hold up.

The “competition” arguments that big retailers make for this bill should also be viewed with skepticism. While they loudly argue for the Marshall-Durbin bill in the name of Washington-imposed “competition,” some of the most prominent retail giants supporting the legislation are using consolidation to grow even bigger, which small independent retailers say is reducing their ability to compete and access the food supply chain on fair terms.

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