S.4674, the Credit Card Competition Act of 2022 introduced by Senators Durbin and Marshall appears to be a solution in search of a problem. The act, if passed, would impose price caps on the amount merchants can be charged when choosing to utilize credit card networks to build their business.
In discussions with Senators’ Fischer and Sasse the League continues to educate and emphasize three crucial points:
1. interchange savings are not passed on to the consumer, and previous changes to the system have not benefitted the consumer or small businesses, but rather help retail giants who are under no statutory obligation to pass savings on to consumers;
2. the legislation would incentivize profit-maximizing merchants to unilaterally choose the cheapest networks even if they lack security technology and protocols effectively exchanging consumer data security for retailer profits; and
3. the legislation would place undue financial burden on financial institutions due to increased insecurity creating additional costs to the financial institutions and ultimately, the consumer.
It is time to let Nebraska lawmakers know that in searching for potential consumer savings, this legislation unilaterally empowers retailers to maximize profits without implementing guardrails for stakeholders. As an unintended consequence, consumers will have less access to safe, affordable financial products.