DALLAS — President Donald Trump has put cutting credit card swipe fees on his midterm agenda, telling Republicans gathered here that reducing what he called “out-of-control” fees could save the average American family $1,200 annually—an announcement that met with quick pushback from the Defense Credit Union Council over legislation Trump has previously endorsed.
“We will cut out-of-control credit card swipe fees, saving the average family $1,200 per year,” Trump said Wednesday night during the Republican Party’s midterm convention.
Trump also compared U.S. swipe fees with those charged elsewhere.
“We will not allow Americans to pay seven to eight times more in those fees than they do in other countries,” Trump said, comparing his proposed approach with his efforts to lower prescription drug prices through most-favored-nation pricing.
Details Not Provided
Trump did not spell out during that portion of his remarks what level he believes swipe fees should be reduced to or detail how his administration would achieve the $1,200 in claimed household savings. But he has previously endorsed the Credit Card Competition Act, the bipartisan legislation sponsored by Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL), and other lawmakers.
Credit unions and other financial institution groups have long strongly opposed the CCCA, which has the backing of the nation’s retailers.
The president’s comments came during the Republican National Committee’s first midterm convention, a two-day gathering in Dallas intended to highlight the administration’s record and rally Republican voters ahead of the Nov. 3 elections. Trump also said he would pay every American adult a $5,000 “Trump dividend” if Republicans retain control of Congress in November’s midterm elections.
DCUC: Bill Doesn’t Guarantee Consumer Savings
The Defense Credit Union Council responded by welcoming Trump’s focus on lowering household expenses while arguing that the Marshall-Durbin legislation is the wrong way to accomplish that goal.
“President Trump wants families to keep more of their money. We share that goal, and military families deserve to benefit from it,” DCUC President and CEO Anthony Hernandez said in a statement. “But the Marshall-Durbin bill is the wrong answer,” Hernandez added. “A policy that puts affordable credit, dependable service, and valuable member benefits at risk without establishing what families will actually save is not the relief those who serve deserve.”
DCUC argued the Credit Card Competition Act, S. 3623, does not require merchants to pass savings from lower interchange expenses to consumers or require reductions in grocery or gasoline prices. It also does not guarantee $1,200 in annual savings to individual households, the organization said.
The $1,200 figure has been promoted by supporters of the legislation and is based on estimates of the household cost associated with interchange fees. Merchant groups contend businesses build those costs into prices and that greater competition would ultimately benefit consumers.
The nation’s retailers and their trade groups have stated the legislation could save merchants and consumers approximately $17 billion annually by increasing competition in the card-processing market.
DCUC challenged those assumptions.
“Senator Marshall and Senator Durbin are promising a discount at the gas pump and the grocery store that their bill never requires anyone to provide,” DCUC Chief Advocacy Officer Jason Stverak said in a statement. “They owe military families the math: How much would merchants save, how much would reach consumers, and what could families lose in rewards or affordable services? A number in a tweet is not a family budget.”
Bill Would Change Card Routing
As the CU Daily has reported, the Credit Card Competition Act seeks to increase competition in credit card processing by requiring the largest card-issuing financial institutions to make at least two unaffiliated payment networks available for processing transactions, rather than permitting transactions to be routed exclusively through networks affiliated with Visa or Mastercard.
The current proposal applies to financial institutions with at least $100 billion in assets, meaning most credit unions and community banks would be exempt, but credit unions and banks have said the plan would ultimately affect all issuers.
Trump endorsed the legislation earlier this year, saying it would help stop what he called the “out of control Swipe Fee ripoff.” The president’s Dallas comments put the issue into the broader economic platform he is asking voters to support in the midterm elections.
DCUC Cites Military Financial Readiness
DCUC said interchange revenue helps defense credit unions pay for fraud prevention, cybersecurity, rewards programs, low- and no-fee products, deployment assistance and access to financial services in military communities.
The organization said reducing that revenue without reducing the costs associated with providing those services could result in higher fees elsewhere, fewer benefits or reduced access to affordable financial products.
DCUC acknowledged those are potential consequences rather than predetermined outcomes but said they should be weighed against claims of consumer savings.
“For a deployed servicemember, financial readiness means knowing a spouse can handle an emergency back home,” Hernandez said in a statement. “For a military family, cash back can help buy groceries, rewards can help cover a trip home, and an affordable loan can keep a car repair from becoming a crisis. Those benefits should not be put at risk for savings nobody is required to deliver.”
DCUC called on Congress to reject the Marshall-Durbin legislation and urged the administration and lawmakers to consult defense credit unions, servicemembers, veterans and military families before making changes to the credit card payments system.
“We are ready to work with President Trump and Congress on real relief,” Stverak said in a statement. “Success should be measured by what a military family keeps after all the tradeoffs not simply what a retailer stops paying. Those who serve deserve a better deal.”
