Last week, U.S. Senators Richard Durbin and Roger Marshall introduced a bill known as the Credit Card Competition Act of 2022. It would require financial institutions with more than $100 billion in assets to offer merchants much more say in how credit card transactions are routed. The bill stipulates that at least two unaffiliated networks must be available—and they can’t be Visa and Mastercard (the two largest credit card networks) together.

Either of those could be paired with American Express or Discover, for example. There’s also the possibility that smaller networks could enter the fray. These might include the likes of Shazam, STAR and NYCE, which currently process a small share of ATM and debit card transactions. Or new competitors might emerge.

The senators are acting like they have consumers’ backs, employing rhetoric such as Senator Marshall’s statement, “When it comes to Main Street versus Wall Street, I’ll choose Main Street every time.”

Here’s the problem: This legislation would harm consumers in multiple ways.


For starters, it would have a devastating effect on credit card rewards programs. Debit card rewards all but disappeared after Sen. Durbin’s eponymous Durbin Amendment (part of the Dodd-Frank Act) took effect in 2011. It capped debit card interchange fees, removing a key funding source of debit card rewards. Sen. Durbin and others argued that consumers would benefit from lower prices. Merchants won’t admit it, but most pocketed the savings.

“Averaging across all sectors, it is estimated that the vast majority of merchants in the survey (77.2 percent) did not change prices post-regulation, very few merchants (1.2 percent) reduced prices, while a sizable fraction of merchants (21.6 percent) increased prices,” the Federal Reserve Bank of Richmond concluded.

Reducing credit card rewards programs—taking cash back and travel benefits away from everyday Americans so that large retailers can benefit from lower card processing fees—would be bad enough. But there are other problems with this proposal, too.

Data security

Major card networks such as Visa and Mastercard invest billions of dollars into secure, reliable payment networks. This bill would take away many of their economic incentives for doing this important work.

“The proposed routing mandates on credit cards will shift billions in consumer spending to less secure, less innovative, and higher-risk transactions that would weaken America’s payment system and put consumers in a vulnerable position,” explained Jeff Tassey, board chairman of the Electronic Payments Coalition. “The proposed legislation will lead to even more private consumer information being made available to foreign networks in countries like China and Russia.”

Access to credit

Even the smaller financial institutions that would be exempt from these new rules acknowledge that the proposal is a bad idea that could limit Americans’ access to credit.

“Over 70 percent of U.S. GDP depends on consumer spending, and credit cards are what drive that,” said Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions. “Efforts to extend new routing requirements to credit cards would create significant disruption to credit-issuing credit unions, specifically how they manage operational risk and the extension of credit, making the availability of credit for consumers and small business less certain.”

If banks and credit unions have fewer incentives to offer credit cards, people with lower incomes and lower credit scores will probably be the first to lose access.

The bottom line

Don’t be fooled by these political talking points about competition and consumer benefits. There is already healthy competition between Visa, Mastercard, American Express and Discover. This benefits consumers in areas such as rewards, data security and access to credit.

The only beneficiaries of these proposed changes will be large retailers who will use their scale and influence to secure lower fees that they will use to line their pockets.

We’re not going back to a cash-first economy. Credit cards are an important part of in-person and online commerce. There’s even ample evidence that people spend more when they use cards. The same is true of buy now, pay later providers such as Affirm and Afterpay — and retailers seem happy to pay them much higher processing fees than credit card networks.

Instead of viewing credit cards as the enemy, merchants should view these processing fees as a necessary cost of doing business. Credit cards provide retailers and consumers with many advantages. Disrupting this market would lead to many adverse consequences for all parties.

Have a question about credit cards? E-mail me at and I’d be happy to help.