WASHINGTON — After President Trump again expressed his support for the Credit Card Competition Act—in an arena named for a credit union– the Defense Credit Union Council and America’s Credit Unions both responded with statements warning the legislation would hurt both consumers and military families’ access to affordable credit, with no guarantee of lower retail prices.
The statements were issued in response to Trump’s comments supporting the legislation at his Kansas rally Monday night in support of Republican Sen. Roger Marshall, a sponsor of the bill. The rally was held at Heartland Credit Union Arena in Park City, near Wichita.
Trump’s backing of the measure predates the rally, as the CU Daily has reported. In a September endorsement video for Marshall, Trump promised quick action on legislation addressing credit card swipe fees. The nation’s merchants are strong backers of the legislation.
A Fight Over Payment Networks
The bipartisan legislation, sponsored by Marshall and Sen. Dick Durbin (D-IL) would require covered credit card issuers with more than $100 billion in assets to enable transactions over at least two unaffiliated networks. At least one would have to be outside the two largest networks, Visa and Mastercard. The bill would give merchants more choice over transaction routing rather than directly cap credit card interchange fees.
As the CU Daily has reported, the sponsors argue that additional competition would lower merchants’ processing costs and ultimately benefit consumers. Banks and credit unions opposing the proposal warn that reduced revenue could undermine card benefits and financial services. Credit unions and other financial institutions have stated the legislation could disrupt the fee system that helps finance credit card rewards.
‘Windfall for Big Box Retailers’
“Credit unions, and the broader financial services industry, have steadfastly opposed the Credit Card Competition Act and other efforts to upend the payments system. History shows that previous interchange restrictions have only benefited big-box retailers, keeping the windfall for themselves while everyday consumers lose access to services,” Kathleen Coulombe, America’s Credit Unions chief advocacy officer, said in a statement. “We advocate for what’s best for our members, and what’s best for our members is a safe, stable, and reliable payments system and access to affordable credit.”
Will Hurt Military Families
Although the bill’s asset threshold would exclude most credit unions from its direct requirements, DCUC contends that its effects could extend to the institutions serving military communitiest
“Financial readiness is essential to military readiness,” DCUC President and CEO Anthony Hernandez said in the statement.
Hernandez said service members need assurance that their families can obtain affordable credit from a trusted credit union when unexpected expenses arise.
“We share the President’s commitment to making life more affordable. Real relief must strengthen a military family’s financial security,” Hernandez said. “Legislation that could leave that family with fewer affordable credit options, without requiring merchants to pass along savings, fails that test.”
He urged Trump to reconsider his support and strengthen institutions serving military families.
Jason Stverak, DCUC’s chief advocacy officer, said interchange revenue helps defense credit unions finance secure, affordable services. Reducing that revenue could lead to higher fees or fewer borrowing options when families face emergencies or military transfers, he said.
“This is about access to capital for servicemembers and their families,” Stverak said in a statement/
Questions About Consumer Savings
Stverak pointed to research on the Durbin Amendment’s debit card interchange restrictions as grounds for skepticism about promised consumer savings.
A 2015 Richmond Federal Reserve analysis, drawing on a survey of 420 merchants, reported that an estimated 1.2% reduced prices following the regulation, while 77.2% left prices unchanged and 21.6% raised them. The research examined debit card regulation, rather than the credit card routing requirements proposed in the current legislation. Richmond Fed
“Debit caps and credit-card routing mandates differ, but that record undercuts promises of automatic consumer savings,” Stverak said. “Military families should not have to risk their access to affordable credit for relief they may never receive. President Trump should withdraw his support, and Congress should reject this bill.”
