The more I learn about the “Credit Card Competition Act” the more compelled I feel to speak out. It’s another example of Congress writing a bill with its own interests in mind rather than communities like ours. This bill was brought forth by Sen. Dick Durbin (D-IL) earlier this year. He is a long-time ally of big-box stores. Instead of welcoming competition, they have lobbied their friends like Sen. Durbin for favors to benefit their businesses alone.
The free market is something I proudly support. All businesses should have to compete on equal grounds, and using the government to create market conditions that favor one industry is antithetical to everything I believe in. I followed in my father’s footsteps and created my own small business. I quickly learned how to set a competitive price for my services. Too high and I wouldn’t have many clients. Too low and I couldn’t cover my costs.
The same thing is true for the financial services industry. Think of all the financial tools you use every day: payment apps on your watch or phone, fraud monitoring services, credit cards, checking accounts, and more. These all take a substantial amount of brainpower and dollars to create. The companies that create these tools have a right to decide their prices. However, big-box stores do not want to pay market rate for things like credit card technology. Instead, they want Congress to pass this bill that will allow them to shirk paying the interchange fees that support these innovations. These are the fees, about 2-3 percent of a purchase, that merchants pay to financial institutions when accepting a customer’s credit card.
Fees like these are indispensable when it comes to keeping banks and credit unions afloat. These fees are not arbitrarily set but are a result of market conditions and how much retailers value being able to accept a secure type of payment like a credit card. If big-box stores are allowed to use credit card technology without paying for it, this will severely hurt small financial institutions like credit unions. Credit unions play a key role in the St. Louis region’s development. They provide loans to both businesses and individuals, and they are on-the-ground when it comes to understanding our areas’ economic challenges.
Credit unions aren’t the only ones who have spoken out against this bill. Conservative groups have seen this crony playbook before and know this bill is antithetical to their values. But it’s also labor unions who are against this bill. This bill will hurt credit card rewards programs. This includes travel rewards that give you the ability to earn miles or hotel credits. With revenue being diverted away from banks and credit unions, they will need to scale back rewards, which will in turn affect the travel industry, which is full of union jobs. For instance, the flight attendants’ union has told Congress to ground this bill.
During my campaign for city council, one of the goals I emphasized was the economic development of the City of O’Fallon. As you can see, this bill will hurt our residents’ ability to keep their credit card rewards, or even access basic financial services like checking accounts or loans. It will hurt small businesses who need access to loans to get their feet off the ground. It is also against the very free-market principles that make economies prosper. Allowing the government to intervene like this sets a dangerous precedent that if you don’t like the price of something, you can just ask government to “fix” it for you.
Ward 5 Councilmember, City of O’Fallon
