Breitbart News reports that a new bill called the “Credit Card Competition Act,” introduced by Sen. Dick Durbin (D-IL) this past summer, aims to give the Federal Reserve the power to control how payments on credit cards are routed.
These new routing mandates on credit cards will shift billions in consumer spending to higher-risk payment networks. Doing so will weaken America’s payment system and put everyday consumers like you at significant risk of fraud. This is because your personal and financial data will be run over foreign, less secure networks.
Big-box stores are pushing for this bill heavily. The likes of Walmart, Target, and Amazon stand to gain hundreds of millions of dollars if they can cut their processing costs by using cheap overseas networks. Unfortunately, they will do this at your expense. Cheaper networks offer little or no credit card rewards and have not invested in 21st century fraud prevention. But big-box stores know they won’t be on the hook if fraud occurs. Your bank or credit union has guaranteed payment to the retailer, and it’s these financial institutions that will be hurt when fraud skyrockets further.
This will especially hurt small credit unions who don’t have the deeper pockets of multinational corporations. Not only will they have to cover the cost of fraudulent purchases, they will also lose revenue as they see the interchange fees they normal get during purchases plummet. Interchange fees are a critical component of America’s current payment infrastructure. By effectively capping them, Congress would put big retailers’ profits before Americans’ financial security.
That’s the Democrat way.