Protect My Points: Oppose the CCCA

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Impact of the so-called Credit Card Competition Act

Some in congress are proposing legislation that threatens the valuable benefits that consumers receive with their credit cards, like rewards programs. The so-called Credit Card Competition Act would expand government-imposed routing mandates to the credit card market. Proponents of the legislation say it will inject more competition into the market; it’ll do anything but. Imposing government mandates on credit card routing, as this legislation will do, could have negative impacts for community banks and consumers alike.  This bill is being pushed by the biggest grocery, big box, and online retailers and is opposed by travel experts, including The Points Guy.

It could spell the end of card rewards programs. When was the last time you booked a flight using rewards points? Or saved on gas? If you’re like millions of Americans, you probably take advantage of credit cards rewards. Those rewards are supported by the banks and card networks who supply them. This legislation could mean the end of those rewards, as the funding that enables those popular programs would be eliminated.  Debit card rewards went away when a similar law went into effect for those cards and the same will happen for credit if the Credit Card Competition Act (CCCA) is passed.

It could limit community banks’ credit card offerings. The misguided legislation will harm banks of ALL sizes and consumers. Community banks focus first and foremost on serving their community and their customers. For many community banks, one convenient option they provide to customers is credit card services. If routing mandates like the CCCA are imposed, community banks may lose the ability to support credit card offerings for their customers.

It could expose credit cards to data security risks. The key component of this legislation is that it will allow the government to mandate which networks can be used for routing credit cards. Rather than allow banks to choose networks based on security and soundness, they will be forced to use a network the government chooses. Banks and card companies work hard to ensure the networks they use are the most secure; cheaper, alternative networks being pushed by mega-retailers may not have the same priority.