October 23, 2023
Dear Mr. Hooben,
Thank you for taking the time to contact me regarding the Credit Card Competition Act (CCCA) and routing-related issues. I am always grateful to hear from Alabamians on this critical issue. As a member of the Senate Committee on Banking, Housing, and Urban Affairs, Alabama’s financial concerns are of the upmost importance for me.
S.1838, The Credit Card Competition Act, led by Senators Durbin (D-IL), Marshall (R-KS), Welch (D-VT), and Vance (R-OH) seeks to bring more competition among credit card networks by allowing new startup card networks to offer payment processing to merchants at lower rates. This legislation was introduced on June 6, 2023 and referred to the Committee on Banking, Housing, and Urban Affairs.
Businesses of all sizes have been strained by the inflationary environment created by the Biden Administration. The policies of this Administration have led to record levels of inflation—increasing the costs of goods and services across the board and putting significant pressure on businesses to stay afloat. Small businesses are the backbone of our economy, and I will continue advancing sound policies that lower inflation and remove regulatory red tape, ultimately working to create a climate that allows businesses to thrive.
Advocates of S.1838 believe that lower rates of payment processing for merchants would provide cost savings during this period of persistent inflation. While I support lowering the cost of doing business, I believe we must also protect access to financial services and credit for consumers. The rates for payment processing, also known as interchange revenue, allow many local credit unions and community banks to provide access to financial services and credit for individuals, families, and small businesses, especially in underserved, rural, and low-income communities. Without interchange revenue, many community-based financial institutions would be forced to stop issuing credit cards altogether or eliminate low-cost banking services.
On the Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law in 2010, Senator Durbin (D-IL) attached an amendment that capped the swipe fees on debit card purchases. Supporters argued that the merchants would save money on fees and pass these savings down to customers. However, a study from the Federal Reserve Bank of Richmond indicated that 98.8 percent of merchants did not pass-through savings from the Durbin amendment to consumers and more than 20 percent increased their prices.
As a member of the Subcommittee on Financial Institutions and Consumer Protection on the Senate Banking Committee, I am particularly focused on ensuring consumers are protected from bad actors and cybercriminals. I am concerned that any new networks created by the CCCA would expose consumers to potential security, fraud, and personal privacy risks. Interchange fees help cover the cost of security mechanisms as well as fraud detection. Merchants using new payment processors without air-tight security and up-to-date fraud prevention capabilities, in order for them to save money, could put their customers’ privacy and hard-earned dollars at risk. Given the recent rise of artificial intelligence and scammers using more innovative technologies to steal money from vulnerable Americans, I believe we need to focus our efforts on enhancing cybersecurity protocols and defenses instead of weakening them.
I am proud to serve our great state in the Senate. Please know that I will continue to fight to restore fiscal sanity back to our country and preserve the American Dream for generations to come. Rest assured that I will keep your thoughts in mind regarding the Credit Card Competition Act as I continue to push back on the Biden Administration’s wasteful spending, and as I work to secure the best financial interests of all Alabamians.
Thank you again for reaching out. Do not ever hesitate to reach out if I can be of assistance.
Sincerely,
Katie Boyd Britt
