Durbin-Marshall Credit Card Bill Will Hammer Consumers, Small Business
In another display of Washington crony capitalism, the bipartisan Durbin-Marshall credit card bill threatens to reshape the financial landscape for small businesses and consumers in a sharply negative way. Sponsors Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) claim the measure will foster competition among credit card providers. Many financial experts believe, however, the law would significantly favor giant multinational corporations over American small businesses and consumers.
The bill’s proposed alteration to the credit card routing system is at the heart of the controversy. Supporters argue this change would benefit small businesses, community banks, and consumers by creating competition. But, a study conducted by the University of Miami suggests that all the benefits will accrue to the largest national retailers — nearly $3 billion worth — while small businesses will generally see little or no increased revenue.
Do Democrats want shut down small businesses ?Durbin, Marshall Weaponizing the Government to Help Mega-Stores https://t.co/mNFDxa8aSF
— deborah green (@NewaiGreen) April 11, 2024
A wide variety of industry groups oppose the bill and argue it will have harmful effects for many small businesses and the U.S. economy at large. In the case of the travel and tourism industry, trade group Airlines for America claims the legislation would cost its sector more than $23 billion in revenue annually if it passes.
The bill’s potential to undermine credit card rewards programs makes it particularly contentious. Often seen as a staple of American consumer culture, these programs could be at risk. Brian Riley of Mercator Advisory Group said, “Their reward programs will dry up, just as they did with debit cards.” This would affect consumers’ ability to accrue benefits from their spending and impact small business owners who leverage these rewards to manage costs.
The nonpartisan Congressional Research Service (CRS) has weighed in, stating, “It is not clear whether retailers would pass interchange savings on to consumers.” CRS does find the law would reduce costs for most of the largest retailers but it believes there is little evidence those savings would translate to lower consumer prices. History shows that similar mandates introduced under the Dodd-Frank Act only led to more systemic fraud and far fewer debit rewards programs — without any noticeable decrease in consumer prices.