The Wall Street Journal Editorial Board has published an op-ed criticizing the Durbin-Marshall Credit Card Bill, which is being pushed by Senator Dick Durbin. The editorial argues that the bill would shift the cost of processing card transactions from retailers to consumers, describing it as "crony capitalism masquerading as consumer benefit."
According to the editorial, "The Illinois Senator is pushing a bill in Congress’s lame-duck session that would shift the cost of processing card transactions from retailers to consumers" and claims that it "redistributes income from cardholders to [corporate mega-stores like Home Depot and Kroger]."
The proposed Credit Card Competition Act aims to require card issuers to allow payments on at least two networks, including one other than Visa or Mastercard. It exempts issuers with less than $100 billion in assets but would cover more than 83% of cardholders.
Senator Durbin has been promoting this bill during his final days as Judiciary Committee chairman, claiming it addresses inflation by reducing credit card swipe fees. He stated, “There is a hidden contributor to the high prices we all pay on everything from furniture to eggs: credit card swipe fees.”
The editorial criticizes Democratic efforts to blame businesses for inflation and warns that Mr. Durbin's plan could backfire on consumers. It points out that previous attempts at similar regulation have led to reduced rewards programs and increased fees for checking accounts.
Additionally, the new mandate could benefit Discover, based in Mr. Durbin's home state, which competes with Visa and Mastercard but is exempt from certain regulations.
The piece concludes by suggesting that investing in new technologies and legislating national data security standards might create a stronger payment system instead of imposing such mandates.