Sens. Roger Marshall and Dick Durbin failed last week to inch their Credit Card Competition Act legislation forward by means of the GENIUS Stablecoin.
They had sought to attach an amendment with their CCCA language to the stablecoin bill in an effort to have a larger piece of legislation take their stalled proposal across the finish line in Congress.
Instead, a battle royal – pitting retail and merchant interests against those of banks and card networks – is set to continue as the senators take aim at fees charged every time a consumer swipes a credit card.
Retailers, restaurants and other merchants argue the fees are an undue and costly burden for stores and restaurants. To ease that expense, the senators contend their bill would inject competition into an industry dominated by Visa and Mastercard by requiring bank card issuers to make an alternative network available.
That would be a mistake in the view of bank card issuers and the card networks that argue these fees pay for needed security and popular loyalty programs.
In an interview last week, Richard Hunt, the executive chairman of the Electronic Payments Coalition, called out the irony of attaching the CCCA language to a stablecoin framework bill, noting that the cryptocurrency would introduce the competition for cards that Marshall and Durbin crave. It smacks of double-speak when the merchant camp suggests stablecoins are a new payment possibility, but still contend cards need more competition, he said.
That sentiment draws attention to the swarm of new digital payments rivals have sprung up over the past two decades since a predecessor to PayPal Holdings was founded in 1998, and more recently with the ascent of Apple Pay and Google Pay. Presumably, those new options have swamped cards with more competition.
But that’s not necessarily the case, partly because many of those new digital tools still connect to credit cards, buttressing the position of big card issuers, such as JPMorgan Chase and Capital One, as well as the networks, namely the dominant players, Visa and Mastercard.
The strength of the card fortress was demonstrated by an Atlanta Federal Reserve Bank report last month presenting survey results that showed credit cards were consumers’ preferred payment option 35% of the time. It also showed the credit card share expanding more than other methods.
Durbin, a Democrat from Illinois, and Marshall, a Republican from Kansas, say they’re pushing their bill on behalf of big and small merchants, arguing that credit card fees often eat up a significant portion of businesses’ slim margins.
Groups representing merchants, including NACS, aka the National Association of Convenience Stores, made clear last week that they’ll keep pushing to pass the CCCA provisions. Marshall has taken the lead recently on an effort started by decades ago by Durbin, who has said he won’t seek re-election.
“The banks have been so overly aggressive in advertising against him in Kansas, and doing some other things, that they made it a top priority for him,” NACS General Counsel Doug Kantor said of Marshall in an interview last week. “They made him angry.”
Spokespeople for Durbin and Marshall have declined to comment, but the Merchants Payments Coalition said the latest CCCA campaign brought a “surge of support.”
Whether or not stablecoins ever become a true threat to cards remains to be seen. One industry consultant, Peter Tapling, says they have the potential to challenge cards, but he doesn’t see them as a threat to Visa or Mastercard at the moment.
Tapling points to Paze, the Early Warning Services digital wallet that’s struggled to get traction, as evidence of how difficult it is to lure consumers and merchants to new forms of payment. It’s always the chicken-egg problem – will consumers demand to use it enough for merchants to adopt it or will merchants make it available enough that consumers gravitate to it, he said in an interview Friday.
Back in Washington, Kantor says CCCA supporters are already hunting for the next piece of legislation capable of carrying the bill to passage.
