“I will not let the interests of powerful corporations close our economy or jeopardize consumers. We are fighting for Missourians. We are fighting for an open and fair economy. We are fighting for the consumer.”
This was written by Sen. Josh Hawley seven years ago. Today, however, Hawley is endangering the privacy and finances of Missourians by co-sponsoring a bill that will have devastating impacts for consumers and small businesses.
Hawley has sided with Illinois Democrat Sen. Dick Durbin in supporting government mandates for credit card routing networks. The deceptively named Credit Card Competition Act gives enormous power to government bureaucrats by putting them in charge of America’s credit card system and forcing financial institutions to use credit card routing networks selected by the federal government. If Durbin succeeds in passing this bill, consumers will suffer catastrophic consequences.
This legislation will eliminate popular products like cashback and rewards programs that financial institutions of all sizes offer. If you use your credit card rewards for a vacation, that’s gone. If you use cashback points to pay for expenses like groceries or gas, that’s gone. If you use your rewards to support benefits for your employees, that’s gone.
The bill also exposes every credit card user to detrimental security risks. Instead of allowing financial institutions to choose routing networks that offer the best customer experience and data security protection, your financial data will be put in jeopardy in the name of “competition.” Big-box retailers will be able to select cheaper, less secure credit card networks to pad their bottom lines while you bear the cost every time that data is compromised. Not a single penny is borne by the retailers that choose the routing network when fraud occurs. Either the bank or the consumer ends up footing the bill.
Most alarmingly, Hawley is co-sponsoring a bill that props up highly profitable big-box retailers while harming consumers. Bill sponsors claim the legislation will result in lower prices for consumers, but this is the furthest thing from the truth. Big-box stores reaped massive profits from the fee caps on debit card transactions in the 2010 Durbin Amendment. Did they pass those savings to consumers? No, they pocketed the money. In a February 2011 investor call, Home Depot’s CFO reported to shareholders that the federal government’s debit card caps increased the company’s profits by $35 million. The Federal Reserve Bank of Richmond found that 21% of merchants actually increased their prices after the original rule went into effect. Why would we, or Hawley, expect this time to be different?
The bottom line is that this bill is bad policy for Missouri consumers and businesses. We must encourage Sen. Eric Schmitt and the rest of our congressional delegation to recognize this bill for what it really is — a poorly veiled effort by the largest merchants in the country to grow their profits.
President and CEO of the Missouri Bankers Association
