Paul Gessing, president of the Rio Grande Foundation, said his organization opposes a pending U.S. Senate bill to regulate the credit card industry.
“Yes, the Rio Grande Foundation still remains opposed,” Gessing told the New Mexico Sun. “Our main concern is that the federal government should not be involved in setting or regulating the credit card industry."
S. 1838, the "Credit Card Competition Act of 2023," originally sponsored by U.S. Sen. Dick Durbin (D-Ill.), would require banks to offer merchants at least two network options, one of which cannot be Visa or Mastercard, for processing credit card transactions.
The bill applies to credit cards what a similar measure in 2010, often referred to as the “Durbin Amendment,” applied to debit cards. The 2010 measure was a requirement of the “Dodd–Frank Wall Street Reform and Consumer Protection Act.”
Gessing signed a letter to then-President Donald Trump and congressional leaders in April 2020 expressing opposition to efforts to apply the “Durbin Amendment” to credit cards.
“We are concerned by the push by lobbyists for restaurants and other retailers to expand Dodd-Frank’s Durbin Amendment price controls to credit cards as well as debit cards,” said the letter. “The Durbin Amendment is not only one of the costliest provisions of the Dodd-Frank financial overhaul of 2010, it is one of the most regressive.”
That letter referenced a 2014 George Mason University study which found the 2010 “Durbin Amendment” resulted in an increase of 1 million "unbanked" Americans in the year after the measure was enacted.
Durbin and co-sponsors of the bill have said it will increase competition in the credit card industry. Gessing says there’s already competition.
“There are four major credit card companies (MC/Visa/AMEX/Discover),” he said. “This is a competitive market.”
“Businesses tend to accept all the cards because otherwise they miss out on too many customers,” Gessing said. “No one is forcing them to accept credit cards.”
He said the bill could cost up to $5 billion a year and threaten more than $75 billion in credit card rewards accumulated by consumers annually.
Airlines for America, a trade group representing major airlines, released a report that said 85,332 visitors used airline credit card points for air travel to New Mexico in 2022. That report said the total economic impact of that travel was $114.6 million and 1,191 jobs.
“Consumers benefit from the current competitive situation through the various options they have available and the many services of credit card companies especially in terms of fraudulent charges and the like, not to mention the widespread ability to use their cards, including internationally,” he said. “They also like the points and miles they receive.”
S. 1838 is currently pending in the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
Founded in 2000, the Rio Grande Foundation is a non-profit think tank based in Albuquerque. It focuses on policy research and analysis in areas such as taxation, education, healthcare, and economic development. The organization describes itself as advocating for limited government, economic freedom, and individual liberty. It produces reports, studies, and commentaries on public policy issues affecting New Mexico and the broader region.