{"id":21559,"date":"2023-06-07T22:00:50","date_gmt":"2023-06-07T22:00:50","guid":{"rendered":"https:\/\/entertainment.runfyers.com\/index.php\/2023\/06\/07\/what-is-the-credit-card-competition-act-the-points-guy\/"},"modified":"2023-06-07T22:00:50","modified_gmt":"2023-06-07T22:00:50","slug":"what-is-the-credit-card-competition-act-the-points-guy","status":"publish","type":"post","link":"https:\/\/entertainment.runfyers.com\/index.php\/2023\/06\/07\/what-is-the-credit-card-competition-act-the-points-guy\/","title":{"rendered":"What is the Credit Card Competition Act? – The Points Guy"},"content":{"rendered":"


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Editor\u2019s note: This story is continually updated with new information.<\/em><\/p>\n

Last year, a pair of senators proposed new federal legislation that has the potential to significantly alter \u2014 if not completely eliminate \u2014 the world of credit cards that we know today.<\/p>\n

Today, they reintroduced<\/a> the Credit Card Competition Act \u2014 with additional support from legislators in both the U.S. Senate and U.S. House of Representatives.<\/p>\n

If enacted, this bill could dramatically change the rewards ecosystem. It could affect your ability to collect (and redeem) points and miles toward travel or earn cash back that can offset some of your everyday spending.<\/p>\n

Here at TPG, we teach you to maximize your rewards so that you can, say, earn 3 points per dollar when dining out, 4 points per dollar on groceries and 5 points per dollar when booking airfare.<\/p>\n

Leveraging these rewards and the perks on popular credit cards gives you the ability to travel more frequently \u2014 or in greater comfort \u2014 and discover the world. It can also mean more cash in your pocket, a better airport experience and the benefit of purchase protections that don\u2019t exist with other payment methods.<\/p>\n

This could all change if this bill is approved.<\/p>\n

To help answer your questions about the proposed piece of legislation, we\u2019ve put together this primer that outlines what the bill would do and how it would potentially affect travelers and your hard-earned rewards.<\/p>\n

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What is the Credit Card Competition Act?<\/h2>\n

The Credit Card Competition Act originated in 2022. Two U.S. senators \u2014 Richard Durbin, a Democrat from Illinois, and Roger Marshall, a Republican from Kansas \u2014 introduced it on July 28, 2022. They later attempted to include it as an amendment<\/a> to the National Defense Authorization Act (NDAA). Neither effort gained much traction in Congress.<\/p>\n

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However, on June 7, 2023, Durbin and Marshall reintroduced the bill at a press conference with largely the same structure. They were joined by Senators Peter Welch, a Democrat from Vermont, and J.D. Vance, a Republican from Ohio as well as Representatives Lance Gooden, a Republican from Texas, and Zoe Lofgren, a Democrat from California.<\/p>\n

As its name implies, the proposed legislation aims to inject more competition into the credit card industry to lower the fees merchants pay<\/a> whenever shoppers swipe their credit cards.<\/p>\n

If enacted, the law would amend the Electronic Fund Transfer Act<\/a> by directing the Federal Reserve to require credit card issuing banks to offer a minimum of two networks for merchants processing electronic credit card transactions. It even specifically prohibits these two networks from being those with the largest market share of cards today \u2014 Visa and Mastercard.<\/p>\n

Interchange or swipe fees are a primary revenue driver among credit card companies, which set fees for merchants in exchange for consumers being able to use credit cards at their establishments. Merchants are charged each time a consumer makes a purchase with a card; the exact amount varies based on the type of card, type of transaction and other elements.<\/p>\n

For example, if you go out to eat and use your credit card to pay the $100 bill, a merchant may incur a fee of 3% \u2014 which translates to $3 of the $100 purchase. This is a key reason why some merchants have begun adding surcharges<\/a> for those who don\u2019t pay in cash.<\/p>\n

Overall, this totaled approximately $160 billion in card processing fees last year, according to a Nilson Report<\/a>.<\/p>\n

However, as a percentage of transaction volume, this has largely remained flat in recent years. When you compare Nilson data from 2019<\/a>, 2020<\/a>, 2021<\/a> and 2022<\/a>, here’s how this rate has changed across all transactions processed on credit cards and private-label cards (those tied to a specific retailer and not usable at other merchants).<\/p>\n