Sunshine Sentinel

The head of the Florida Bankers Association said her organization is opposed to proposed credit card regulations pending in the U.S. Senate.

She said the group has made its opposition known to Florida U.S. Sens. Marco Rubio (R) and Rick Scott (R), neither of whom have yet taken a position on the bill.

“The FBA is opposed to the so-called Credit Card Competition Act (CCCA),” Kathy Kraninger, President and CEO of the FBA, told Sunshine Sentinel. “Rather than enhance competition as one would assume from the title, its enactment would actually reduce the options available to consumers in this highly competitive marketplace with nearly 4,000 credit card issuers and highly differentiated products and pricing.” 

“At the same time, it would jeopardize the investments in security and the fraud protection that consumers have come to rely upon,” she said.

The CCCA, S. 1838, would require banks to offer merchants at least two network options, one of which cannot be Visa or Mastercard, for processing credit card transactions. 

The original sponsors of the bill are U.S. Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.)

Glenn Grossman, the director of research at financial advisory firm Cornerstone Advisors, said the pending federal “Credit Card Competition Act of 2023” (CCCA) could lead to an increase in credit card fraud, reported the Sunshine Sentinel on April 25.

“If the CCCA were to be approved the routing of credit card transactions would move from a ‘single pipe’ to ‘multiple pipes’ of data flowing from merchants to issuers,” said Grossman. “Today, card issuers depend on the networks to profile and identify fraud.”

“They see all the transactions on their network and have developed fraud detection capabilities that would not be possible in a fragmented structure the CCCA would create,” Grossman said. 

Kraninger said her organization concurs that the bill could have a negative impact on credit card security, and that the FBA also opposes the bill because it would create price controls.

“Price controls don’t work for consumers – government intervention in a competitive market and in the contracts between merchants and banks and their customers don’t result in savings to consumers, just bad policy and unintended consequences,” she said. 

The bill applies to credit cards what a similar measure in 2010, often referred to as the “Durbin Amendment,” applied to debit cards. The 2010 measure was a requirement of the “Dodd–Frank Wall Street Reform and Consumer Protection Act.” 

A 2014 George Mason University study found that the 2010 “Durbin Amendment” led to a 50% reduction in the number of “fee-free” accounts offered by banks between 2009 and 2013, and doubled average monthly fees on “non-free” current bank accounts. 

The study also said the measure resulted in an increase of 1 million "unbanked" Americans in the year after the measure was enacted. 

Kraninger said this is an example of what could happen if the CCCA was to pass.  

The bill is currently pending in the U.S. Senate Committee on Banking, Housing, and Urban Affairs.