Peter Schorsch
The James Madison Institute joined several other business groups asking Florida’s congressional delegation to vote against legislation that would boost credit card regulation at the federal level.
The Vice President of the conservative think tank, Lindsay B. Killen, wrote Florida’s U.S. Senators and Congress members a letter this week about the “Credit Card Competition Act,” which was recently reintroduced by U.S. Sen. Dick Durbin, an Illinois Democrat.
Durbin’s Office said the legislation aims to stop unfair practices by credit card giants like Visa and Mastercard, particularly regarding network and interchange fees. Among other things, the bill would require card issuers to allow at least two credit card networks to be used on their credit cards instead of just one, and at least one of them must be a network other than Visa or Mastercard.
Killen, however, said the proposal would bring “costly new regulations” and open the door to Americans’ financial data landing in the hands of “bad actors,” such as China.
“The James Madison Institute sees the federal routing mandates in the legislation as unnecessary federal government intrusions in a well-functioning marketplace,” Killen wrote.
“While claiming that it somehow will save consumers money, it in fact will restrict competition and choice. In addition, it will undermine individual personal financial security because it requires alternative payment networks to process payments, including China UnionPay.”
Killen also warned that the legislation “would eliminate more than $68 billion in cash back and rewards programs that consumers currently rely on to pay for air travel, hotels and hundreds of other purchases.”
The letter raises similar concerns to those highlighted by the Associated Industries of Florida and the Florida Credit Union Association, both of which have asked members of the state’s congressional delegation to vote against the bill.
“We believe access to credit should be available to all, and that means ensuring that federal mandates are not allowed to restrict consumer choice, rewards programs and the integrity of a functioning payment processing system that is at present free from the ownership or interference of the Chinese government,” Killen concluded.
The pro-CCCA group Merchants Payments Coalition said, “Claims that the Credit Card Competition Act would let China UnionPay process U.S. credit card transactions are simply not true and are an example of the blatant misinformation being spread by the card industry and its surrogates.”
The Coalition said the bill would instead close loopholes allowing U.S. banks to have UnionPay and require the “alternative payment networks” to be well-established domestic networks.
Killen pushed back rebutted the Coalition’s claims in a statement provided to Florida Politics: “We simply disagree and dispute the contention on UnionPay. CCCA would create a list of foreign-owned payment networks, including China UnionPay. It would not expressly prohibit networks on the list, rather it would prevent an issuer from inhibiting the ability of a retailer to direct transactions over a network that is not on the list. At best, the bill is confusing and doesn’t achieve what merchants claim. At worst, it is a national security problem that makes America’s financial system less secure.”
