Protect Your Rewards: Contact Congress About The Credit Card Competition Act Today
Take Action Here: Generate a letter to Congress to oppose this bill.
When you use your credit card or debit card at the store for $100 of groceries, the store keeps around $97. The remainder, called transaction fees, compensate the various parties for their role in making the transaction happen quickly and securely, and offsets the loss sustained by your bank due to fraud in the credit card network. These transaction fees also pay for the rewards (miles, points, cash-back, etc) offered.
The Controversy
Some merchants, particularly giant corporations such as Amazon, want to do away with the merchant fees in order to save money, which is understandable from their shareholders’ perspective. Their argument is that the fee is too high due to a non-competitive marketplace for the transaction processing services.
This group argues that merchants are over-charged for transaction fees, and consumers should not be okay with the trend of up-charging for using their card.
Consumers, who enjoy the various rewards, and banks, who shoulder the expense and fraud loss, argue that the marketplace is extremely competitive and that the revenue stream is necessary to maintain the security, responsiveness and innovativeness of the credit card network.
These groups argue that consumers will be trading their rewards and network reliability so that Amazon and big box stores can make a few more dollars.
Enter Congress: The Credit Card Competition Act
There is a bill being proposed in Congress to lower these fees called the Credit Card Competition Act. According to Andrew P. Scott, Analyst with the Congressional Research Service, there are a number of potential issues within the Act, all of which could have consequences for consumers. Review his report here.
The End of Credit/Debit Card Rewards Programs
If congress passes this bill, it has the potential to drastically restrict cash back and credit card rewards, which many consumers count on for major purchases and financial security.
How To Take Action
If you oppose this bill, we encourage you to take action by contacting Congress and opposing the Credit Card Competition Act. The Free Market Kansans website has provided a simple form that you can fill out in seconds and submit to Congress today. Click here to access the form.