Durbin-Marshall Credit Card Bill Shifts Costs to Small Businesses and Consumers

The following content is sponsored by the Electronic Payments Coalition. 

Supporters of a new bill in Congress like to tout that they are doing it for small businesses and the American people. But in reality, that’s not at all who will benefit from the new credit card mandates they are pushing in the name of increased competition.

In actuality, the mandates in Sens. Dick Durbin and Roger Marshall’s latest credit card bill will only line the pockets of the largest corporate mega-stores.

They argue the bill will boost competition by fundamentally changing the safe, secure, and hassle-free current credit card system by allowing your credit card to be routed on untested alternative networks. The theory is that these untested networks will be cheaper, and the savings will get passed along to consumers.

But a recent report from the University of Miami revealed the disturbing reality of the legislation’s consequences: small businesses are set to bear the brunt of the proposed changes, while mega-stores like Walmart and Target reap immense benefits.

The study found that the nation’s top 100 retailers could see a benefit of nearly $3 billion, with $1.2 billion going to just the top five largest corporations alone. Businesses with less than $500 million in sales … well, they likely will not see any savings from this monumental change.

While Durbin and Marshall may tell you this legislation benefits small businesses and local communities, the report’s facts are clear. The largest U.S. retailers would effectively receive a transfer of approximately $2.9 billion from issuers and cardholders impacted by the legislation. In contrast, small businesses would save significantly less, if anything, despite their already-existing competitive disadvantage against larger businesses.

The report also found that small businesses would likely lose out on their own rewards, as small business operators receive roughly $12 billion in credit card rewards when they make purchases on credit themselves.

Consumers would lose out on their rewards, too. The costs associated with participation in credit rewards programs would skyrocket, threatening both the existence of airline rewards points and credit card rewards programs in general. The loss of these rewards would make it even more difficult for Americans to afford groceries and basic necessities.

And this report is by no means the only one of its kind. The independent Congressional Research Service (CRS) echoed many of the University of Miami’s findings: questioning whether there would be any benefits for small businesses and consumers, raising concerns over the potential increase in fraudulent activity and consumer security. Countless research studies have examined similar mandates pushed by Sen. Durbin back in 2010. The Government Accountability Office (GAO) found that the financial fallout from these changes to debit cards resulted in an overall loss of debit rewards programs and free checking accounts, hitting lower-income Americans the hardest. A 2022 report from researchers at the University of Pennsylvania and Georgetown University showed that the Durbin Amendment “led to higher checking account fees paid by consumers.”

In spite of the overwhelming evidence that consumers are the ones who pay the price, Sen. Durbin and the mega-stores are at it again. This time around, we need Congress to listen to what American consumers – as well as numerous studies – have to say.

We must use our voices and our votes to reject the false promises of Durbin-Marshall and demand real solutions that empower small businesses and promote economic opportunity for all.

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