Estimated Merchant Savings from CCCA? $15 Billion Annually, Says One Researcher

As proponents and adversaries wrangle over the newly resurrected Credit Card Competition Act, a market-research firm has raised by more than one-third its estimate of how much the bill could save U.S. merchants.

A year ago, the firm, Atlanta-based CMS Payments Intelligence Inc., calculated the bill would result in $11 billion in credit card fee savings yearly for card-accepting sellers. Now, the firm has boosted that number 36% to $15 billion, a figure it calls a “conservative” estimate. Accounting for the increase are such factors as the growth of card payments, the rising cost of acceptance, and inflation, the researcher says.

The CCCA on Wednesday was set to be reintroduced with at least some bipartisan support in both chambers of Congress after failing to win passage in 2022.

The bill, originally launched by Sens. Richard Durbin, D-Ill., and Roger Marshall, R-Kan., aims to control card-acceptance costs by requiring that acquiring banks offer merchants choices for transaction routing beyond the two big credit card networks. If one choice is Visa, for example, the other can’t be Mastercard. The bill would operate by requiring card-issuing banks with more than $100 billion in assets to include the second, unaffiliated-network option on their cards.

Proponents of the bill, including many major chains that have complained for years about their cost of card acceptance, have argued these provisions will spur competition for payment processing and drive down acceptance rates, a factor CMSPI’s estimate takes into account. Opponents argue the bill is an effort to interfere with market forces and could push merchants into agreements with systems that don’t offer the array of technology the two big international networks have developed.

Some critics of the legislation also argue it will have little impact on a major piece of merchants’ overall acceptance costs. “As long as [CCCA] covered issuers have choice for the second enabled credit-card network, they could drop any network that chose to compete for merchant-routing volume by slashing interchange. I’d be very surprised if credit card interchange fees fell,” notes Eric Grover, a payments consultant based in Minden, Nev. Interchange fees are a major component of merchants’ overall acceptance costs.

Other fees, however, are a different matter, Grover says. “Issuers don’t have a direct stake in licensing and processing fees that networks change acquirers, which are passed onto merchants. There’d be enormous pressure on network fees on the acceptance side of the network. They could be ratcheted down to zero,” he notes.

Durbin has a history of seeking to control card costs for merchants. He is the lawmaker behind the Durbin Amendment, a rule that went into place more than a decade ago as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The amendment charges the Federal Reserve with restraining fees for debit card acceptance.