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Opinion: Rep. Phil Christofanelli on potential credit card regulations

So far in 2022, Missourians have faced 40-year high inflation, record breaking energy prices, and staggering supply chain shortages. The last thing Congress should do right now is make life harder for them by imposing punishing regulations on their credit cards. Unfortunately, a new bill championed by progressive Sen. Dick Durbin (D-IL) would do just that.

In recent months, merchant lobbying groups have taken to saying just about anything to claim that credit card companies are out to punish them. They have vocally pushed members of Congress, including Missouri Senators Roy Blunt and Josh Hawley, to take up their cause. They claim the small fee they pay on transactions – known as interchange – is crippling to their businesses. Nothing could be further from the truth. In reality, credit cards offer tremendous value to businesses and consumers alike.

Interchange fees are used by community banks and credit card companies to cover the cost of issuing cards, offer generous reward programs, and provide robust fraud protections. If a customer’s debit or credit card is fraudulently used, it is normally the card holder’s bank — not the store or gas station where the fraudulent purchase was made — that reimburses them. Banks, not the merchants, take the hit. Last year, the interchange system saved businesses and consumers more than $80 billion in fraud.

Beyond the tremendous value of fraud protections, interchange fees enable consumers to enjoy valuable credit card reward programs. These programs are not just luxuries for wealthy credit card holders. Many cards offer key cashback programs that automatically deposit reward cash into the card holder’s bank account. Thousands of Missourians benefit from these programs and that additional cash is critical as food and gas prices continue to climb. This new bill would be a hidden tax on Missouri consumers.

Additionally, accepting credit cards is tremendous for merchants. There is a reason why 99 percent of businesses now accept cashless payments. Electronic payments are efficient, and they lead to higher transaction amounts as consumers aren’t constrained by the total cash in their pocket. Some studies show that accepting credit card payments can lead to a 60 percent increase in business for some merchants.

Interchange fees do not fuel inflation. These small fees range from about one to three percent on transactions. They are not the exaggerated totals that merchants and their allies claim they are.

Credit card companies are also taking the economic climate into account. For example, both Visa and Mastercard have established a cap on the total amount of interchange fee that can be charged for gas. With historically high fuel prices, many consumers will hit these caps before they have completely filled their tanks. The gallons of gas they buy after hitting the cap are interchange-free. This raises the question: are gas station owners taking advantage of high prices?

Many gas stations – particularly in rural areas – charge a higher price for drivers who pay using credit cards. Gas station owners claim this is to account for interchange fees. But if credit card companies aren’t charging the fee after a certain price point, what are gas station owners doing with the additional profit their reaping? They certainly aren’t giving it back to the drivers paying the exorbitantly high prices.

Senators Hawley and Blunt know that the people of Missouri are suffering because of inflation, and the reason is not the credit cards in their wallets. Credit cards offer tremendous value, fraud protections, and convenience. That’s all thanks to interchange fees. The last thing Congress should do is allow Washington to over-regulate a system that is working for consumers, businesses, and Missouri communities.