Credit Card Rewards Still Safe As Congress Sets Aside Credit Card Competition Act 

Your credit card rewards are safe, at least for now. The Credit Card Competition Act has been sidelined.

The CCCA aims to lower the “swipe fees” that merchants pay to process credit card transactions. But banking industry groups say lowering those fees could dry up the funds that banks use to provide credit card points, miles and cash-back bonuses.

The act had gained little traction until its main Senate sponsors, Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kan.), loudly pushed for its inclusion in the National Defense Authorization Act. The CCCA ultimately did not appear in that bill, but proponents believe it could still resurface later.

What Is the Credit Card Competition Act?

The CCCA focuses on credit card processing fees. The bill was first introduced in 2022 by a bipartisan handful of legislators, just one of more than 16,000 pieces of legislation that went nowhere in the last Congress, according to GovTrack.

Newly reintroduced, it proposes changing the current standard for processing credit card transactions, pitting retailers against bankers.

Credit card issuers earn billions of dollars a year on goods and services by charging merchants a fee—typically 2% to 3%—on each transaction. Merchants pay those fees so that their customers can use credit cards, although they may pass on the cost to you.

Many retail groups dislike those fees. “Skyrocketing swipe fees have been driving up prices for consumers for far too long,” said Stephanie Martz, chief administrative officer and general counsel for the National Retail Federation, in a news release. “Competition will bring these fees under control.”

Retailers and other supporters of the legislation also complain that most of those processing fees are going to just two networks, Mastercard and Visa. The CCCA would require large credit card issuers to enable at least two processing networks for their credit cards, with at least one of them being run by someone other than Visa or Mastercard. (As introduced, the act would not have affected cards issued by American Express or Discover.)

In theory, having multiple networks would introduce price competition among card issuers, reduce card processing costs and result in savings that would be passed on to consumers.

Opponents say that’s easier said than done. The necessary dual-routing technology does not exist right now, according to groups representing banks and credit unions. And changing that could be costly.

“Hundreds of millions of new chip cards would have to be issued, inconveniencing cardholders, exposing consumers to identity fraud through mail theft, and increasing the cost of the payment system,” the 10 groups said in a letter to congressional leaders.

How Would Cardholders Be Affected?

Retailers claim that, by lowering fees, the CCCA would indirectly help consumers save money. It’s not clear whether, or how, the savings from lower fees would be passed on to shoppers.

Banking groups contend it would hurt consumers. They charge that if the legislation were ever to pass, it would reduce card issuers’ revenue from processing fees. That could leave issuers with less money to support the rewards credit cards that give you points or cash back when pumping gas, booking airline tickets or dining out.

Banking groups point to similar legislation passed after the 2007-08 banking crisis that limited banks’ debit card fees. Research confirms that those fees came down, but debit card rewards are now a thing of the past.

What Happens Now?

The CCCA has been referred to committees in the House and Senate. In a press statement, Marshall said he was “given assurances that the Credit Card Competition Act will be given a vote this Congress.“ Last year’s version of the bill did not come up for a vote in either chamber.