Credit-Card Routing Mandate Would Backfire on Consumers, ICLE Scholar Warns
PORTLAND, Ore. (Jan. 13, 2025) — Recently reintroduced legislation that aims to increase competition in the credit-card industry would instead likely harm consumers, International Center for Law & Economics (ICLE) Senior Scholar Julian Morris warned.
Sponsored by Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.), the Credit Card Competition Act (CCCA) would require credit-card-issuing banks with more than $100 billion in assets to be routed over at least two unaffiliated card networks, at least one of which must not be Visa or Mastercard. Marshall and Durbin, who have sponsored similar bills in several recent sessions of Congress, reintroduced the legislation Jan. 13 after it was endorsed by President Donald Trump.
Morris offered the following quote:
“While the goal of lowering costs for merchants is understandable, payment networks rely on interchange-fee revenue to balance the two sides of the market, maximizing value for both merchants and consumers. Lower interchange-fee revenue would likely cause card-issuing banks either to increase other fees or reduce costs. Most likely they would reduce rewards and other cardholder benefits, such as insurance, which would harm consumers. By diverting traffic away from the major cards’ networks, the routing mandate would also reduce the effectiveness of the cards’ security features, resulting in an increase in preventable fraudulent transactions.”
To interview Julian, contact Jim Fellinger at [email protected].
About ICLE
The International Center for Law & Economics is a nonprofit, nonpartisan research center working with a roster of more than one-hundred academic affiliates and research centers from around the globe. ICLE scholars promote the use of law and economics methodologies to inform public policy debates.