1/19/2024 0 Comments Hands off my heart zippyshare![]() ![]() Airlines like American Airlines and United Airlines, which derive huge sums of revenue from their credit card partnerships, would need to make up for that revenue elsewhere if their cobranded credit card rewards went away. It would take the value away from consumers and put it in the pockets of retailers.Īnother ripple effect could be higher airfare. ![]() This new act would have a ripple effect as well - credit card issuers, including credit unions and community banks, would no longer have the ability to fund the programs and perks we have all grown accustomed to. The retail lobbyists are trying to convince consumers that this would lead to lower prices however, we know that retailers won't pass along those savings, because we know the impact of the Durbin Amendment, and it was a huge loss for consumers. With lower fees collected, consumers would lose out on rewards, purchase protection and fraud protection while retailers add to their bottom line. Simply put, it would kill the funding for credit card rewards programs and allow retailers to pocket the savings from lower interchange fees (also known as swipe fees). This legislation would allow big-box retailers - like Walmart and Target - to choose cheaper, less safe credit card processing networks that expose private consumer information to foreign networks in China and Russia without regard to the value that consumers derive from rewards and many other credit card benefits. JEFFREY GREENBERG/UNIVERSAL IMAGES GROUP/GETTY IMAGES The Credit Card Competition Act of 2023 would have unfavorable consequences for consumers who shop at big-box retailers, such as Walmart. Related: Explaining the Credit Card Competition Act and what it means for your credit card rewards The law, which is heavily backed by the retail lobby, would regulate the rate that Visa and Mastercard charge retailers to process transactions on their networks. would be disastrous for consumers, especially the millions of consumers who get immense value from cash-back and travel rewards on credit card transactions. senators - Richard Durbin, D-Ill., and Roger Marshall, R-Kan. The Credit Card Competition Act of 2023 ("the Big-Box Bill") proposed by two U.S. What's the issue?Ī law with highly unfavorable consequences for those who love credit card points and rewards is currently being reintroduced on Capitol Hill. In the end, the states lose jobs and take in less revenue. We see this with taxation - state lawmakers may have wanted to raise revenues and increase taxes, but did not anticipate that companies and taxpayers would leave for states with lower taxes. Many well-intentioned lawmakers have tried to solve problems, but in the end, created bigger problems. Richard Durbin is trying to accomplish the same, but on a much larger scale. With the Durbin Amendment, the cost-savings went to the bottom lines of shareholders and retailers, not consumers. Only 1.2% passed on lower prices to customers. Most respondents (77.2%) indicated they kept prices the same in the wake of the new rules, while a sizable portion (21.6%) actually increased prices. They said this would be great for consumers it was anything but.Īlmost immediately, debit card rewards vanished - and who did that hurt the most? Consumers with lower income and credit scores, who may have a hard time getting approved for credit cards.Īnd what about prices for consumers? A 2015 economic survey from the Federal Reserve Bank of Richmond found little evidence that merchants passed along their cost savings to consumers. It limited the amount of money banks could make from debit transactions. We saw this a decade ago with the Durbin Amendment from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in the wake of the Great Recession. One of the lessons my dad taught me early in life was the "law of unintended consequences," which is that the actions of people - and especially of government - always have effects that are unanticipated or unintended. ![]()
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