The new rule would limit late fees to $8. Currently credit card companies can charge as high as $41. (Photo by Joe Raedle/Getty Images)
Policy, politics and progressive commentary
Last month, Sen. Roger Marshall (R-KS) pledged to block all legislation brought to the Senate floor, except, of course, for the Credit Card Competition Act, a giveaway to some of the largest corporations in the world.
The CCCA will allow large retailers like Amazon and Walmart to pad their bottom line by slashing interchange fees – the cost of processing a transaction – on credit cards. The idea is that by lowering those fees, corporations can pass on those savings to consumers, however, we all know after four years of corporate price gouging disguised as inflation that those savings are unlikely to make it back to you. The truth is this bill is a billion-dollar giveaway to big box retailers that will cost consumers billions of dollars in increased credit card fees and lost rewards.
We know that this bill won’t lower costs for consumers. When Congress implemented a similar policy to cap debit card interchange fees in 2010, consumers did not see any savings even though large retailers did. Nearly all retailers either kept prices the same or even raised them, according to a study from the Federal Reserve Bank of Richmond. As a result, mega retailers have been able to rake in more than $100 billion, and counting, while consumers did not pocket any savings.
I am also worried this bill will harm Nevada’s tourism industry, which depends on consumers who use their travel rewards points to book flights and stay in our local hotels. About 1 in 3 Americans have travel rewards cards and in 2022 alone, more than 800,000 tourists used their rewards to visit our state. They generated an economic impact of more than $1.16 billion here in Nevada, according to Airlines for America. That is money spent supporting our countless small businesses, dining in our local restaurants, and contributing to our overall economy.
Unfortunately, if this bill becomes law, consumers in Nevada and all over the country can say goodbye to rewards programs as they know them, since these are funded by the existing interchange system. Once banks and credit unions start seeing major interchange revenue drops, cash-back rewards, hotel points, airline miles, and other perks tourists use to visit Nevada will either be significantly cut back or eliminated altogether. Any change that will decimate rewards programs, increase credit card fees, and make travel more expensive will directly hurt Nevada’s bustling tourism industry and the small businesses that rely on it to stay afloat.
We can also learn from countries who have already made this mistake. When the Australian Reserve Bank implemented a similar policy on their credit cards just a few years ago, Australian consumers saw the value of their rewards points plummet by nearly 25%. They also lost access to no-fee credit cards and now pay hundreds of dollars in credit card fees every year. We can expect Nevadans to pay more in credit card fees and for their rewards points to plummet in value if this legislation passes.
Moreover, a study conducted by the University of Miami shows the country’s five largest retailers – Amazon, Walmart, Home Depot, Costco, and Kroger – are expected to pocket $1.2 billion from this bill. It’s no wonder why they’re lobbying Congress to pass it. Just like with the Durbin Amendment, Nevada consumers are not expected to see a dime of these savings.
Republican Sen. Roger Marshall is intent on making the Senate nonfunctional by blocking all bills – unless of course there is a way to benefit multi-billion-dollar mega-retailers. With the annual National Defense Authorization Act, multiple funding measures, and other must-pass pieces of legislation on the horizon, he is going to have plenty of opportunities to try and jam this through. We can’t let him win.
For the sake of Nevada consumers and our state’s tourism economy, I urge Nevada’s Congressional delegation to shut down this lobbyist handout to mega retailers.
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