Credit Card Competition Act Not Part of GENIUS Bill, But Swipe Fee Debate Endures

For a while, it looked like the on-again, off-again legislation would be back on, given the fact that it had been included as an amendment to the GENIUS Act, an acronym for Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 Act.

This week, the Senate passed the act, albeit without the amendment that would have included the CCCA. The GENIUS Act will move to the House of Representatives for further consideration and a vote in that chamber.

Network Routing and Swipe Fees

The CCCA mandates that card issuers offer merchants payments networks other than Mastercard and Visa. The mandate applies to financial institutions with more than $100 billion in assets. The competing networks, among others, would include NYCE, Star or Shazam.

As to what happens next: The CCCA is not dead, even if it is, arguably, dormant. PYMNTS contacted the office of Sen. Richard Durbin, D-Ill., a sponsor of the bill, for comment but had not heard back as of publishing time.

One strategy would be to reintroduce the bill, possibly as part of an amendment to other financial services legislation.

Proponents of the CCCA contend that expanding the routing options will have the ripple effect of driving down so-called swipe fees.

The CCCA has been endorsed by the Merchant Payment Coalition (MPC), the National Association of Convenience Stores (NACS) and other retail groups. The NACS and the MPC said in a statement that the fees paid by merchants to the payment networks were $187.2 billion last year, and represented merchants’ highest operating cost, after wages paid to employees. They also said in that statement that they would continue advocating for the CCCA’s passage. 

In a column exploring the dynamics of the CCCA last year — before the latest attempt to bring it to a vote — PYMNTS CEO Karen Webster wrote: “The CCCA is based on a flawed argument rooted in a lack of understanding of how the credit card system functions in the U.S. today … I don’t think the CCCA will reduce interchange at all — or if it does, by maybe an unnoticeable smidge.”

Issuers opting for lower-interchange alternatives on their cards would eat into rewards programs. That would come at a time when, as PYMNTS Intelligence has found, credit is being used for frequent, everyday purchases, such as groceries and clothing. Separate research from PYMNTS Intelligence indicates that one in four consumers choose their cards based on rewards tied to those cards.

“When faced with a choice, cardholders tend to use cards with rewards more often than those lacking rewards,” we wrote. Promotions or lower prices at the merchant level are no guarantee, as the Federal Reserve found that lower debit interchange rates and the savings that accrued were not passed along to consumers. 

The mandates through Dodd-Frank that capped debit interchange translated into a vast majority of merchants in the survey (77.2%) not changing prices post-regulation. Very few merchants (1.2%) reduced prices, while a sizable fraction of merchants (21.6%) increased prices.