Today, a group of organizations and individuals, sent a coalition letter to Congress in opposition to the inaccurately named Credit Card Competition Act of 2023 (S. 1838 and H.R. 3881). The bill is an extension and expansion of the big-government regulations enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203).

As written, the bill directs the Federal Reserve to draft rules requiring credit cards issued in the United States to offer at least two unaffiliated payment network options for point-of-sale and online transactions. The bill does not promote competition, instead it dramatically expands the role of the federal government to overregulate the market for credit cards. The mandates in the bill are so costly that more than $75 billion in rewards that consumers receive every year would largely disappear. Furthermore, the bill would authorize the federal government to intervene in contracts between private parties. Assuming the bill would result in some savings, there is no evidence that the saving would be pass savings down to consumers.

Because the bill forces credit cards to allow access to all networks, proprietary technology will be exposed to competing networks, destroying incentives to create new and innovative fraud protection and cybersecurity. Also, the bill does not resolve the issue of applying merchant category codes to firearm sales. In addition, the bill does not ban China UnionPay or other state-owned payment card networks from operating in the U.S.

Based on these points, we oppose the Credit Card Competition Act.

The entire letter is available here.