Letter: Credit Card Competition Act harms consumers and access to credit

Jeff Olson, president and CEO of Dakota Credit Union Association, writes, "This anti-consumer piece of legislation allows merchants to choose which card network to process a transaction, which means the best rate (not the most secure) wins.

Jeff Olson.jpg
Jeff Olson is president and CEO of the Dakota Credit Union Association.
Contributed / Jeff Olson
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We must credit policy makers for their clever names for congressional bills and legislative acts. Consider the “Credit Card Competition Act.” It sounds like a positive idea; however, there are unintended (or perhaps intended) consequences. This is a “trojan horse” bill, putting big retailers ahead of hard-working Americans with no regard to consumers or security, leaving us more exposed for fraud.

Many Dakotans are financially worried. With increasing inflation, rising interest rates, and soaring costs of living, people are struggling to make ends meet. Meanwhile, credit unions are helping their members navigate through these times of uncertainty, and the credit card system is a crucial part of this. It’s a system that has worked for years; a system that consumers want, and merchants need.

Credit unions and other card issuers provide fraud protection, card replacement, and cover losses from security breaches with the interchange fee that is added on each swipe. Generally, this is a few cents per transaction; businesses already know this and have priced their merchandise to cover these costs. At most point of sales, consumers choose payment options while merchants get funds authorized, cleared and settled immediately.

The Credit Card Competition Act puts all that in jeopardy. This anti-consumer piece of legislation allows merchants to choose which card network to process a transaction, which means the best rate (not the most secure) wins. It leaves consumers and their financial institutions on the hook for increased fraud costs and exposed personal data. Could this lead to our networks being owned and operated by other countries, even the Bank of China?

What’s at stake here is secure transactions, fraud prevention, and financial privacy. As card issuers face increased costs, fraud skyrockets, and more cards need to be replaced, many providers would simply exit the market. The winners will be big box retailers and the losers will be consumers stuck with higher fees, less access to credit, and more exposure to fraud and security breaches.


This bill—with all the problems mentioned above—hasn’t had a single congressional hearing, but its sponsors are trying to tack it onto important funding bills without a concern or study entered into the congressional record. The bill’s sponsors are trying to run this through in the closing days of Congress rather than engaging in thoughtful discussion about potential negative effects.

We’re still hurting from the last time Sen. Durbin made an amendment to enacted legislation, as the Dodd-Frank Act’s Durbin Amendment increased costs for everyone except big retailers, who kept the profit from Durbin’s interchange cap for themselves. The Richmond Federal Reserve found 98.8% of merchants failed to pass any savings from the interchange cap to consumers, and the Government Accountability Office found the Durbin Amendment among the top regulations negatively impacting access to affordable credit.

Yet, here we are again, ready to give these merchants another windfall. This anti-consumer bill will cause massive harm to those who can least afford more economic hits. It should not go further in the legislative process.

Jeff Olson is president and CEO of Dakota Credit Union Association.

This letter does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.

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