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Sen. Dick Durbin can eat a bag of dicks....

The Tradition

HR King
Apr 23, 2002
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Say Goodbye to Your Credit Card Rewards if This Legislation Is Successful​


For many consumers, rewards cards are the payment method of choice for just about every purchase. That way, you can earn cash back, travel rewards, or other types of reward points on every dollar you spend.

Rewards credit cards have been around long enough that it's hard to imagine they could just disappear one day. However, that's a serious possibility if the Credit Card Competition Act of 2022 is passed.

The bill is supposedly designed to save merchants and consumers money by allowing more competition in processing credit card payments. While it could be good for retailers, it's doubtful that consumers will benefit. And now, the senators behind the bill are trying to speed it through the legislative process.

What is the Credit Card Competition Act of 2022?​

The Credit Card Competition Act of 2022 is legislation introduced by Senator Dick Durbin and Senator Roger Marshall. It would prohibit credit card companies from restricting the number of card networks that merchants can use to process transactions.

Under the current system, the banks that issue credit cards can require that transactions are processed with a specific payment network. For example, if you pay with a Chase Visa card, the merchant must use Visa to process the payment. It also pays processing fees, which are a small cut of the transaction, to Chase and Visa.

If the Credit Card Competition Act passes, banks would need to work with alternative payment networks. They couldn't require that a merchant processes transactions with, say, Visa or Mastercard. Retailers would be able to choose whichever payment network offers them the best deal, instead of being stuck with the network the bank demands.

Bye, bye rewards​

Credit card processing fees might not seem like something especially relevant to everyday consumers. But if you're using rewards to get rich, or even if you just like to earn some extra cash back on your normal bills, those fees matter quite a bit.

Here's why -- processing fees are a huge part of how credit card companies make money. In 2020, when card issuers made $176 billion in income, transaction fees accounted for $51 million of that. Their only larger source of income was credit card interest.

Credit card companies can pay you 1% back, 2% back, and sometimes much more because they're getting swipe fees from the merchant. In The Ascent's research on the average credit card processing fees, interchange fees ranged from 1.15% and $0.05 to 3.15% plus $0.10, on average.

Being forced to work with other payment networks means card issuers will have to accept lower swipe fees. And if they're making less money, you can bet they're not going to keep offering the same rewards rates and take a loss. After all, we already have a historical precedent with a very similar situation.

Whatever happened to debit card rewards?​

It may feel like ancient history at this point, but there was a time when you could earn generous rewards with your debit card. Although rewards debit cards are still around, they're rare, and credit cards offer much more bang for your buck.

The catalyst was the Durbin Amendment, a last-minute addition to 2010 financial reforms. This amendment required that the Federal Reserve cap swipe fees for debit cards at a reasonable rate, which was set at 0.05% plus $0.21. It's named after Dick Durbin, and yes, it's the same Dick Durbin who is now trying to push through this credit card processing legislation.

Since banks had to significantly lower their debit card processing fees, most simply did away with debit rewards programs. To make it even worse, many banks increased checking account fees to make up for lost revenue. On average, checking account fees went up by over 70%, according to a study by the University of Pennsylvania.

Supporters of the Durbin Amendment claimed it was a win for consumers. With merchants able to save money, they could pass that savings on to customers with lower prices. As you may have expected, that didn't happen. According to 2015 research by the Federal Reserve Bank of Richmond, here's what retailers actually did:

  • 77.2% didn't change prices
  • 21.6% increased prices
  • 1.2% reduced prices
Based on the research, restricting debit card processing fees hasn't been beneficial to consumers. If the same thing happens with credit card processing fees, it will probably end up being a net negative. We'll earn far less in rewards, and prices will stay the same or increase.

What happens next​

Durbin and Marshall introduced the Credit Card Competition Act as standalone legislation, but they're now attempting to attach it to the National Defense Authorization Act (NDAA), a defense spending bill. The dubious logic behind this move is that credit card swipe fees are causing veterans to be charged more for purchases at military commissaries. But the more likely reason is because the act could get through Congress faster if it's attached to a defense bill.

Debate on the NDAA starts on Oct. 11 with a small group of lawmakers. The final vote isn't expected to take place until after the November midterm elections.

This credit card bill is still far from a done deal. It could end up fizzling out, in which case rewards enthusiasts will be breathing a sigh of relief. If you're worried about its potential implications and want to make your voice heard, you can write to your elected representatives and state senators to let them know you oppose the Credit Card Competition Act.

 

Say Goodbye to Your Credit Card Rewards if This Legislation Is Successful​


For many consumers, rewards cards are the payment method of choice for just about every purchase. That way, you can earn cash back, travel rewards, or other types of reward points on every dollar you spend.

Rewards credit cards have been around long enough that it's hard to imagine they could just disappear one day. However, that's a serious possibility if the Credit Card Competition Act of 2022 is passed.

The bill is supposedly designed to save merchants and consumers money by allowing more competition in processing credit card payments. While it could be good for retailers, it's doubtful that consumers will benefit. And now, the senators behind the bill are trying to speed it through the legislative process.

What is the Credit Card Competition Act of 2022?​

The Credit Card Competition Act of 2022 is legislation introduced by Senator Dick Durbin and Senator Roger Marshall. It would prohibit credit card companies from restricting the number of card networks that merchants can use to process transactions.

Under the current system, the banks that issue credit cards can require that transactions are processed with a specific payment network. For example, if you pay with a Chase Visa card, the merchant must use Visa to process the payment. It also pays processing fees, which are a small cut of the transaction, to Chase and Visa.

If the Credit Card Competition Act passes, banks would need to work with alternative payment networks. They couldn't require that a merchant processes transactions with, say, Visa or Mastercard. Retailers would be able to choose whichever payment network offers them the best deal, instead of being stuck with the network the bank demands.

Bye, bye rewards​

Credit card processing fees might not seem like something especially relevant to everyday consumers. But if you're using rewards to get rich, or even if you just like to earn some extra cash back on your normal bills, those fees matter quite a bit.

Here's why -- processing fees are a huge part of how credit card companies make money. In 2020, when card issuers made $176 billion in income, transaction fees accounted for $51 million of that. Their only larger source of income was credit card interest.

Credit card companies can pay you 1% back, 2% back, and sometimes much more because they're getting swipe fees from the merchant. In The Ascent's research on the average credit card processing fees, interchange fees ranged from 1.15% and $0.05 to 3.15% plus $0.10, on average.

Being forced to work with other payment networks means card issuers will have to accept lower swipe fees. And if they're making less money, you can bet they're not going to keep offering the same rewards rates and take a loss. After all, we already have a historical precedent with a very similar situation.

Whatever happened to debit card rewards?​

It may feel like ancient history at this point, but there was a time when you could earn generous rewards with your debit card. Although rewards debit cards are still around, they're rare, and credit cards offer much more bang for your buck.

The catalyst was the Durbin Amendment, a last-minute addition to 2010 financial reforms. This amendment required that the Federal Reserve cap swipe fees for debit cards at a reasonable rate, which was set at 0.05% plus $0.21. It's named after Dick Durbin, and yes, it's the same Dick Durbin who is now trying to push through this credit card processing legislation.

Since banks had to significantly lower their debit card processing fees, most simply did away with debit rewards programs. To make it even worse, many banks increased checking account fees to make up for lost revenue. On average, checking account fees went up by over 70%, according to a study by the University of Pennsylvania.

Supporters of the Durbin Amendment claimed it was a win for consumers. With merchants able to save money, they could pass that savings on to customers with lower prices. As you may have expected, that didn't happen. According to 2015 research by the Federal Reserve Bank of Richmond, here's what retailers actually did:

  • 77.2% didn't change prices
  • 21.6% increased prices
  • 1.2% reduced prices
Based on the research, restricting debit card processing fees hasn't been beneficial to consumers. If the same thing happens with credit card processing fees, it will probably end up being a net negative. We'll earn far less in rewards, and prices will stay the same or increase.

What happens next​

Durbin and Marshall introduced the Credit Card Competition Act as standalone legislation, but they're now attempting to attach it to the National Defense Authorization Act (NDAA), a defense spending bill. The dubious logic behind this move is that credit card swipe fees are causing veterans to be charged more for purchases at military commissaries. But the more likely reason is because the act could get through Congress faster if it's attached to a defense bill.

Debate on the NDAA starts on Oct. 11 with a small group of lawmakers. The final vote isn't expected to take place until after the November midterm elections.

This credit card bill is still far from a done deal. It could end up fizzling out, in which case rewards enthusiasts will be breathing a sigh of relief. If you're worried about its potential implications and want to make your voice heard, you can write to your elected representatives and state senators to let them know you oppose the Credit Card Competition Act.

Weird that you mention Durbin by name, but leave out the Republican co-sponsor.
 
So the complaint is that credit card companies will be limited in how badly they can stick us with processing fees? This is bad how?
There is currently competition when it comes to processing fees for bank cards (Visa & Mastercard). You can go through your bank, use another bank, or use a non-bank processor. Fees are based on a variety of factors such as industry, average ticket amount, chargeback experience, type of equipment, and card present.

There will be unintended consequences beyond what was listed in the OP, and it won't save anyone any money.
 
I'm more surprised that cash back on credit cards isn't taxed as income like sign up bonuses for checking accounts.
 
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That's what I thought too. It must be $51 billion.
From the linked article...

Credit card companies posted $176 billion in income in 2020, down from $178 billion in 2018. Interest fees accounted for $76 billion and interchange fees accounted for $51 billion in 2020.
 
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You seem to forget who the President is and what state he comes from. There are not the votes to overturn a Presidntial veto.
If this legislation is as dire as you say it is, there is no way it gets by Biden. However, if it is a regulation/ oversight, it may have merit.
 
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I think its a turn off now to go into a restaurant and see that you get a 4% fee being passed on for the credit card fees. I get that it is part of doing business but if that could be lower the consumer would save and these businesses wouldn't have to pass along the charges so obviously.

I haven't had a credit card since 2008, so I don't get the need for rewards. No one has ever gotten rich of them except the credit card companies. I suspect people spend way more than they normally might just to get a few extra reward points.
 
I think its a turn off now to go into a restaurant and see that you get a 4% fee being passed on for the credit card fees. I get that it is part of doing business but if that could be lower the consumer would save and these businesses wouldn't have to pass along the charges so obviously.

I haven't had a credit card since 2008, so I don't get the need for rewards. No one has ever gotten rich of them except the credit card companies. I suspect people spend way more than they normally might just to get a few extra reward points.
That's probably certainly true, but there are definitely people that make a tidy sum by using a credit card with rewards and paying it off each month. As long as you were disciplined.
 
So, just to clarify the wildly inaccurate headline, the bill is going to make it so credit card companies can't stick to retailers (who then pass the sticking it down to the consumers) and they are going to make it so the "Do I have the right kind of credit card" question no longer exists. It would seem the policy of allowing certain types of cards to be locked out of being used at a business would be anti-competition, not the other way around.

The article then goes on to predict that the response from credit card companies would be to eliminate rewards, something that could very well happen, or they may not. Having rewards is something people look for so competition might actually get companies to keep them in one form or another. But the bill itself is not getting rid of them.
 
I think its a turn off now to go into a restaurant and see that you get a 4% fee being passed on for the credit card fees. I get that it is part of doing business but if that could be lower the consumer would save and these businesses wouldn't have to pass along the charges so obviously.

I haven't had a credit card since 2008, so I don't get the need for rewards. No one has ever gotten rich of them except the credit card companies. I suspect people spend way more than they normally might just to get a few extra reward points.
How is it possible to function in modern society without a credit card? I needed to apply for a new one just so I could get a loan approved (because they would not take American Express, something the bill being discussed would prevent from happening). Anyway, kudos to you, sir. It actually takes work to not have a credit card these days.
 
I think its a turn off now to go into a restaurant and see that you get a 4% fee being passed on for the credit card fees. I get that it is part of doing business but if that could be lower the consumer would save and these businesses wouldn't have to pass along the charges so obviously.

I haven't had a credit card since 2008, so I don't get the need for rewards. No one has ever gotten rich of them except the credit card companies. I suspect people spend way more than they normally might just to get a few extra reward points.
We put almost every expense we have on a credit card. Got several thousand dollars in points saved up for a free trip somewhere…
 

Say Goodbye to Your Credit Card Rewards if This Legislation Is Successful​


For many consumers, rewards cards are the payment method of choice for just about every purchase. That way, you can earn cash back, travel rewards, or other types of reward points on every dollar you spend.

Rewards credit cards have been around long enough that it's hard to imagine they could just disappear one day. However, that's a serious possibility if the Credit Card Competition Act of 2022 is passed.

The bill is supposedly designed to save merchants and consumers money by allowing more competition in processing credit card payments. While it could be good for retailers, it's doubtful that consumers will benefit. And now, the senators behind the bill are trying to speed it through the legislative process.

What is the Credit Card Competition Act of 2022?​

The Credit Card Competition Act of 2022 is legislation introduced by Senator Dick Durbin and Senator Roger Marshall. It would prohibit credit card companies from restricting the number of card networks that merchants can use to process transactions.

Under the current system, the banks that issue credit cards can require that transactions are processed with a specific payment network. For example, if you pay with a Chase Visa card, the merchant must use Visa to process the payment. It also pays processing fees, which are a small cut of the transaction, to Chase and Visa.

If the Credit Card Competition Act passes, banks would need to work with alternative payment networks. They couldn't require that a merchant processes transactions with, say, Visa or Mastercard. Retailers would be able to choose whichever payment network offers them the best deal, instead of being stuck with the network the bank demands.

Bye, bye rewards​

Credit card processing fees might not seem like something especially relevant to everyday consumers. But if you're using rewards to get rich, or even if you just like to earn some extra cash back on your normal bills, those fees matter quite a bit.

Here's why -- processing fees are a huge part of how credit card companies make money. In 2020, when card issuers made $176 billion in income, transaction fees accounted for $51 million of that. Their only larger source of income was credit card interest.

Credit card companies can pay you 1% back, 2% back, and sometimes much more because they're getting swipe fees from the merchant. In The Ascent's research on the average credit card processing fees, interchange fees ranged from 1.15% and $0.05 to 3.15% plus $0.10, on average.

Being forced to work with other payment networks means card issuers will have to accept lower swipe fees. And if they're making less money, you can bet they're not going to keep offering the same rewards rates and take a loss. After all, we already have a historical precedent with a very similar situation.

Whatever happened to debit card rewards?​

It may feel like ancient history at this point, but there was a time when you could earn generous rewards with your debit card. Although rewards debit cards are still around, they're rare, and credit cards offer much more bang for your buck.

The catalyst was the Durbin Amendment, a last-minute addition to 2010 financial reforms. This amendment required that the Federal Reserve cap swipe fees for debit cards at a reasonable rate, which was set at 0.05% plus $0.21. It's named after Dick Durbin, and yes, it's the same Dick Durbin who is now trying to push through this credit card processing legislation.

Since banks had to significantly lower their debit card processing fees, most simply did away with debit rewards programs. To make it even worse, many banks increased checking account fees to make up for lost revenue. On average, checking account fees went up by over 70%, according to a study by the University of Pennsylvania.

Supporters of the Durbin Amendment claimed it was a win for consumers. With merchants able to save money, they could pass that savings on to customers with lower prices. As you may have expected, that didn't happen. According to 2015 research by the Federal Reserve Bank of Richmond, here's what retailers actually did:

  • 77.2% didn't change prices
  • 21.6% increased prices
  • 1.2% reduced prices
Based on the research, restricting debit card processing fees hasn't been beneficial to consumers. If the same thing happens with credit card processing fees, it will probably end up being a net negative. We'll earn far less in rewards, and prices will stay the same or increase.

What happens next​

Durbin and Marshall introduced the Credit Card Competition Act as standalone legislation, but they're now attempting to attach it to the National Defense Authorization Act (NDAA), a defense spending bill. The dubious logic behind this move is that credit card swipe fees are causing veterans to be charged more for purchases at military commissaries. But the more likely reason is because the act could get through Congress faster if it's attached to a defense bill.

Debate on the NDAA starts on Oct. 11 with a small group of lawmakers. The final vote isn't expected to take place until after the November midterm elections.

This credit card bill is still far from a done deal. It could end up fizzling out, in which case rewards enthusiasts will be breathing a sigh of relief. If you're worried about its potential implications and want to make your voice heard, you can write to your elected representatives and state senators to let them know you oppose the Credit Card Competition Act.

I remember when you could actually save money by using cash or check that it reduced the price of what you were buying. In fact, you saved more by using cash than what you would get back in any cash reward promotion.

Credit card companies have gotten very wealthy while people used the credit cards to get their cash back "bonuses". In effect, it was the perfect example of trickle on, er, I mean, trickle down economics.

Not surprised that people like Trad will miss being trickled on.
 
If the consumer wants to make money off buying something with a CC, my suggestion would be for the consumer to not buy the product and keep the money. Why should a merchant have to fund the consumer's reward program. That's stupid and needs to stop.
 
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Got to be a typo, $51 million out of $176 billion is not significant.

Here's why -- processing fees are a huge part of how credit card companies make money. In 2020, when card issuers made $176 billion in income, transaction fees accounted for $51 million of that. Their only larger source of income was credit card interest.

I caught that too.

And it was second only to the primary thing they make money on. Not very compelling.

I'm not particularly persuaded by the rewards thing. I mean, I like rewards as much as the next person and use them, but it's kind of like the "free phone" for signing a contract with a cell phone company, it's not free, you're still paying for it with higher rates.

This is a little different because the merchant is paying for your rewards instead of you, but I don't feel like there's some ethical reason that merchants should pay for my rewards, it seems like a needless shuffling of capital.

I'm dubious that they really could isolate that debit fee reductions didn't have a positive effect on prices. But I do know that these transaction fees are brutal for small businesses that run on small margins as we've moved to a cashless society. I don't have any particular love for the bottom line of Walmart and Target, but I guess if I had to choose between extra money going to banks and credit card conglomerates, and the companies that I count on to make food and clothes and beer available to me, I guess I'd side with the latter.
 
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How is it possible to function in modern society without a credit card? I needed to apply for a new one just so I could get a loan approved (because they would not take American Express, something the bill being discussed would prevent from happening). Anyway, kudos to you, sir. It actually takes work to not have a credit card these days.

Only place it has really been an issue is when renting a car, for whatever reasons they don't like debit cards or cash, at least not at O'Hare.
 
Only place it has really been an issue is when renting a car, for whatever reasons they don't like debit cards or cash, at least not at O'Hare.
Those places probably like the paper trail credit cards provide in case someone rents a truck to make into a car bomb or something.
 
Only place it has really been an issue is when renting a car, for whatever reasons they don't like debit cards or cash, at least not at O'Hare.
Oh, so you are the guy I stood behind in line at the rental lot in Portland having to have it explained to you that you cannot rent a car with a gift card?
 
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How is it possible to function in modern society without a credit card? I needed to apply for a new one just so I could get a loan approved (because they would not take American Express, something the bill being discussed would prevent from happening). Anyway, kudos to you, sir. It actually takes work to not have a credit card these days.
You can't fly or rent a car without one.
 
So the complaint is that credit card companies will be limited in how badly they can stick us with processing fees? This is bad how?
Did you even read the article? If you are too stupid to understand basic financial and business policies and procedures, than just keep your ignorance to yourself.
 
Weird that you mention Durbin by name, but leave out the Republican co-sponsor.
Then change the title to EVERYONE INVOLVED CAN EAT A.....

My AMEX Blue Card pays for 1/2 of my monthly gas & grocery bill every December and my Bonvoy Card handles my hotel stays. I need my dadgum rewards!
 
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This is the bigger problem for a larger majority of cc customers. Addressing 20-29% interest is legalized theft

Yeah, they make insane revenues.

Now deduct the bad debts of people who run up their credit card bills, don't pay, and declare bankruptcy.

I'll wait while you crunch those numbers.
 
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