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Opinion: Hawley’s Credit Card Folly Will Hurt St. Louis

With spring just around the corner, millions of Americans are planning summer vacations, which include visits to iconic sites like the Gateway Arch and evenings at Busch Stadium. In fact, more than 25 million visitors travel to St. Louis each year, supporting nearly 90,000 jobs in the region and creating billions of dollars in economic impact. While that is great news for the region, new legislation sponsored by U.S. Senator Josh Hawley could set St. Louis tourism back, leading to fewer tourists and dealing the city a major economic blow.

Currently, every time someone makes a purchase with a credit card, businesses pay what is known as interchange – usually 1-3 percent of the transaction price. Community banks and credit unions use interchange to pay for many things including ensuring transactions are secure and protecting consumers from fraud. This funding also pays for popular credit card reward programs, like cash back and the very popular points for travel.

The credit card bill, introduced by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kansas) – which Sen. Hawley recently cosponsored – would allow retailers to choose new and untested networks to process payments. The bill also states that banks will have to allow merchants a choice of more than one network. The catch is that those networks cannot be “affiliated” with each other.

Even though these new networks could cost slightly less, they are significantly less secure. Switching to an untested network would further expose consumers to fraud, as well as eliminate funding for cash back and travel rewards. There is a real possibility that rewards members may not know that their points/cash back programs are no longer accumulating. They would be using the same card but transactions would be processed on different networks.

While consumers would lose credit card rewards, the largest retailers, like Walmart, Target, and the Home Depot – the same corporations pushing this legislation – would experience a windfall in savings. There is no indication such savings would result in lower prices at the register. Consumers could expect prices to stay the same while losing access to rewards that make travel more affordable. The results for the St. Louis regional economy would be devastating.

A recent study from Airlines for America found that more than 250,000 visitors used airline credit card points to fly to Missouri in 2022, creating a $414 million economic impact. That figure does not even include flights paid with points earned with credit cards not associated with airlines. It also does not include visitors who used points or cash back to pay for rental cars, gas, meals, hotel stays, and more. Millions of visitors use these points and cash back each year to fund travel to places like St. Louis, Lake of the Ozarks, Branson, and more. These points make family vacations more affordable and achievable, especially in an era of high inflation.

When travelers spend less money on the core logistical details of a trip – like flights, rentals cars, and gas – they have more money to spend at their destination. That means more money flowing to local restaurants, tours, entertainment, and retail stores.

Explore St. Louis finds that this level of tourism is critical for the area’s small businesses. It also maintains jobs supported by the tourism and hospitality industries. Critically, it props up Missouri’s local

municipalities. Visitor spending generates significant local and state tax revenue, and reduces the tax burden of each St. Louis household by more than $1,200.

Any reduction or elimination, of credit card rewards would have major implications for the region’s economy. When travelers need to spend more out-of-pocket on flights, hotels, and rental cars, they will either cut back on spending while visiting, or travel less. Neither option is good news for St. Louis. With less visitor spending, local municipalities would lose critical tax revenue and be faced with hard choices when it comes to balancing budgets. Cities would need to either raise taxes to make up the budget shortfall or cut services. That’s a lose-lose for Missouri.

At a time when St. Louis should be on the upswing with new facilities like CityPark, direct flights from Europe, and billions of dollars of new investment, the last thing the region needs is legislation that would take the economy backwards. This would be especially detrimental at a time when St. Louis is still facing a difficult recovery from the pandemic. Senator Hawley should do everything he can to grow and strengthen the state’s economy, not jeopardize it. Consumers’ hope is that he reconsiders his stance on the bill and puts Missouri’s businesses, workers, and economy first.