If Top Card Execs Must Testify, So Should Merchant Leaders, CCCA Opponents Argue

Days after Sen. Dick Durbin, D-Ill., sent letters to the chief executives of Visa Inc. and Mastercard Inc. demanding they testify before the Senate Judiciary Committee about their opposition to the Credit Card Competition Act, the Electronic Payments Coalition is asking why the committee is not requesting that leaders of large retailers testify how they would pass along savings from the CCCA to consumers.

According to Durbin’s letters, they were addressed to Visa’s and Mastercard’s CEOs because they have ducked prior requests to explain in-person to the committee why the card networks and their allies have “spent millions of dollars opposing the CCCA, including through false and misleading advertising claiming the bill would ban credit card rewards programs.” The letters strongly urge that the card company CEOs appear in person rather than send a high-ranking substitute.

The CCCA would require financial institutions with $100 billion or more in assets to enable at least one network other than Visa or Mastercard for credit card transaction processing.

The EPC says its reasoning for calling out large retailers, such as Target Corp. and The Home Depot Inc., rests on its contention that the chains failed to pass savings along to consumers when similar routing mandates were implemented for debit cards in 2011, legislation that was sponsored by Sen. Durbin. The EPC lobbies on behalf of card issuers and networks.

“When Congress implemented similar mandates on debit cards, consumers didn’t see any savings and mega-stores bragged about the windfall profits,” Richard Hunt, executive chairman of the EPC says by email. “Surely, Sen. Durbin would demand these corporate mega-store CEOs testify how they pocketed the savings instead of providing relief to consumers.”

Hunt adds that research from the Congressional Research Service, along with other independent studies, “have said this legislation could make credit cards less secure, [that] any savings are unlikely to be passed to consumers” and that it will “increase risks for small businesses, hurt local economies, and jeopardize the rewards programs Americans of all incomes use to fight inflation.”

Durbin also sent letters to the chief executives of American Airlines and United Airlines requesting they testify as well, as those airlines have aggressively opposed the CCCA to “protect billions of dollars in windfall profits” they collect from their respective co-branded credit cards, the letters allege.

Supporters of the CCCA see Durbin’s letters as an attempt to get the card networks on record in a public forum about the potential harm they claim the CCCA would cause credit card holders if passed.

“This is an opportunity for the card networks to get their defense of why the profits they will continue to earn from swipe fees won’t be enough to continue funding credit card rewards if the CCCA passes,” says Stephanie Martz, an executive committee member for the Merchants Payments Council and chief administrative officer and general counsel for the National Retail Federation. “Claims the CCCA will take away rewards programs are false.”

Martz adds that the card-network CEOs should take the request to testify seriously, as the Senate Judiciary Committee is taking claims that the CCCA will harm consumer credit card rewards programs seriously. “If it were me, I would want to get my position on the record,” Martz adds.

Visa and Mastercard did not respond to requests for comment.

The EPC’s Hunt argues the letters are a desperate attempt by the CCCA’s co-sponsors to “show some sort of momentum to their political donors while continuing to weaponize the federal government against any business who opposes them” after failing to deliver a vote in 2023 on the legislation.

“This hearing might allow supporters of the bill to say they had a hearing, but the legislation has not gone through regular order and is no more ready for a vote before the Senate than a Supreme Court nominee would be after an appearance before the Senate Banking Committee,” Hunt says.

On Wednesday, the CCCA gained two new co-sponsors, bringing the number of co-sponsors to six. Martz says the onboarding of new co-sponsors reflects growing bi-partisan support for the CCCA because it is “smart policy and anti-inflationary.”