The following content is sponsored by the Electronic Payments Coalition.
Big retail stores talk a big game about customers being the top priority. Whether it’s with new seamless checkout processes, improved customer service, or new loyalty programs, retailers are always seeming to work toward an enhanced consumer experience.
Big retailers like Walmart and Target definitely make these claims, but their aggressive lobbying for anti-consumer legislation proves otherwise. These big-box stores have teamed up with Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) to push for credit card routing mandates that would do nothing but hurt consumers and small businesses.
This legislation is known as the Credit Card Competition Act. Under the proposed legislation, retailers would have the power to route credit card payments through the network of their choice, meaning they could choose the most unsafe, cheapest network in order to increase their own profits. Essentially, consumers would lose out on essential credit card benefits, and these mega-stores would get a massive payday.
We know exactly what to expect with the Credit Card Competition Act because it mirrors the harmful consequences of the 2010 Durbin Amendment. The Durbin Amendment routed consumers’ debit card transactions, and retailers promised it would result in increased savings for consumers and small businesses. As you may have guessed, the exact opposite happened, and ever since 2010, the Durbin Amendment has negatively impacted consumers, small businesses, and community banks in order to profit big-box retailers. As a matter of fact, since 2011, retailers have pocketed more than $145 billion in Durbin Amendment profits, and consumers have continued to suffer.
One of the major losses consumers faced under the Durbin Amendment was rewards programs. Most people don’t even realize debit cards have rewards programs because of this amendment’s negative impact on these crucial benefits. The Credit Card Competition Act would do the same thing to credit card rewards, which consumers of every income level utilize.
Groceries, gas, and travel are only a few of the many credit card rewards programs that would die under the Credit Card Competition Act. Target and Walmart are selfishly pushing for legislation that would put consumers in a financially difficult position. Choice of network, credit card rewards, what else could retailers possibly take from consumers?
When retailers have the power to choose which network a consumer’s payment is routed through, this presents a serious security threat. Payment security is essential for consumers and a main factor they look for when deciding on a credit card. Without this crucial benefit, consumers’ financial data is put at risk.
Billion-dollar businesses like Walmart and Target do not need another government handout like the Credit Card Competition Act. Consumers, small businesses, and community banks cannot afford to lose their choice of network, rewards programs, and fraud protection to line big-box retailers’ pockets. We need our lawmakers to recognize the severity of this legislation and why they must oppose it.
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