What is the Credit Card Competition Act?

What is the Act, and is it true rewards are in danger? Let’s take a look in this article.

Overview of the Credit Card Competition Act

The Credit Card Competition Act (CCCA) is a bill that was introduced and sponsored by Democratic Senators Dick Durbin and Peter Welch and Republican Senators Roger Marshall and J.D. Vance.

You may remember Senator Durbin’s name as the senator behind the Durbin Amendment, the bill that is responsible for regulated interchange on debit cards issued by large banks and permitted minimum charges on credit cards. Now, Senator Durbin hopes to take on credit card interchange fees. Instead of requiring a cap (as the Durbin Amendment did for debit cards) the bill would require the largest credit card-issuing banks to give businesses a choice of at least two unaffiliated networks to process credit card transactions. Additionally, the two networks can’t be those “with the largest market share of cards issued” – That is, Visa and Mastercard.

The theory is that this would drive down costs due to the competition of a business having options for the network that processes cards. Currently, there is no choice on that – a business accepting a card processes it on that card’s network.

You can read a short summary of the bill on Senator Durbin’s page here.


Some retail groups, large retails such as Target and Walmart, and consumer advocates support the CCCA, noting that swipe fees have continued to go up over time. One of the more vocal supporters has been the National Retail Federation, who positions the argument as choosing local businesses over big banks and finance companies. For example, this ad by the NRF encourages Congress to “stand up for Main Street over Wall Street.”

Supporters claim that the lowered fees will result in savings for businesses and consumers, claiming that much of the reduction may go directly to consumers in the form of lowered prices, though acknowledging that the business might keep some of the savings for business expenses. It’s good to see supporters acknowledging that, since many people feel that it’s unlikely businesses would reduce their shelf prices due to fluctuations in interchange fees.


Those who oppose the bill claim that it will cause less secure payments and threatens rewards programs, which are funded by transaction fees. They also say that it’s just a money grab by large retailers trying have their cake and eat it, too. (That is, the retailers benefit tremendously from credit card payments, as customers often spend more and it has traceability and transaction security, but they don’t want to pay for the service.)

One of the more vocal opponents has been the Electronic Payments Coalition, which posts social media campaigns highlighting the possible threat to rewards cards as the primary reason to oppose the bill. For example, in this video, the ominous voiceover tells the viewer that “big-box retailers” are going to line their pockets with YOUR rewards.

Scare tactics aside, there is a possibility that rewards would be impacted, but it’s difficult to say how at this point. The argument about weaker transaction security seems unfounded, as the networks that payments would be routed over still must meet transaction security standards.

The Reality of the CCCA

The truth is, it’s hard to say what impacts the bill will have on rewards cards, and on interchange savings.

The Durbin Amendment had both positive and negative effects, and it’s likely that the CCCA would be the same. Given the popularity of rewards cards and their use as a differentiator to get consumers to sign up for particular cards, it’s hard to imagine them going away completely. However, it’s not outside the realm of possibility that card issuers would scale back on the rewards offered, either offering smaller percentages for cash back or focusing more on non-cash back rewards, such as airline miles. Finance site Nerdwallet notes that countries with lower interchange fees than those in the US still have rewards credit card programs, but that it may not be as lucrative.

Another thing to be wary of is reduced interchange fees that don’t result in lower costs for businesses or consumers. On some pricing models, such as flat rate pricing, you pay one rate no matter what the underlying interchange costs are. Those processors are not obligated to lower your rate just because their costs were lowered. You wouldn’t necessarily see any savings.

You could also miss out on the interchange savings if you’re on a tiered pricing model. With tiered pricing, the credit card processing company chooses what rates to charge a business regardless of what the interchange cost actually is and they determine which of your transactions to charge according to which rates. In those situations, reductions in interchange are more likely to be pocketed as additional profit for the processor than passed on to the business.

In fact, that’s what happened for awhile with many businesses after American Express introduced its OptBlue pricing model, which lowered fees to accept Amex. Instead of passing those savings on to businesses, credit card processors kept the difference, with businesses being none the wiser. Over time, this has shifted as more businesses become aware of lower cost Amex pricing models, but it’s possible we could see something similar here.

How to Avoid Overpaying for Processing

At this time, it’s unclear when (or if) the CCCA will be voted on. But the best way to avoid the scenarios mentioned above is to avoid tiered pricing. Instead, seek out the more transparent interchange plus pricing with true pass-through. In this type of pricing model, the processor passes the true cost of interchange to you and then charges a small fee on top of interchange as their fee. If interchange goes down, the charge they pass to you is reduced. This model is the only one where you can benefit from reductions in interchange fees.

However, interchange plus pricing by itself isn’t a silver bullet. The true pass-through, without padding or manipulating interchange, is the key. If you need help finding a competitive interchange plus processor, sign up for a free CardFellow account to compare real pricing from multiple processors instantly. Simply enter a few details about your business and you’ll get quotes right away, with access to expert assistance if you want it, and no annoying calls from processors. (We don’t give anyone your contact info!) Best of all, any processor chosen through your CardFellow account is bound by our legal agreement with that processor, ensuring true pass-through pricing, a lifetime rate lock, and free statement monitoring to ensure your fees are exactly what they should be.

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