Jess Sharp, senior vice president of the American Bankers Association (ABA), said that the Credit Card Competition Act represents government interference that would reduce credit card rewards. This statement was made at the American Bankers Association Summit on April 9.
"This is price fixing," said Sharp. "The Credit Card Competition Act does effectively the same thing. It puts the government in between credit card issuers and the technology providers they work for. It will reduce the value of these card programs for customers."
The Credit Card Competition Act (CCCA) is a bipartisan legislative proposal reintroduced in 2023 by Senators Dick Durbin and Roger Marshall. It aims to increase competition in the credit card payments market by requiring the largest banks to enable at least two processing networks on their cards. This measure is designed to reduce interchange or "swipe" fees charged to merchants, which totaled over $170 billion in 2023, largely dominated by Visa and Mastercard. According to the Wall Street Journal, industry groups like the ABA have pushed back strongly, warning that the legislation could reduce credit card rewards, increase fraud exposure, and restrict credit access. Retailers have supported the bill as a means to lower operating costs.
According to a 2024 survey by the ABA, 80% of U.S. adults have at least one credit card that offers rewards, and 88% of cardholders consider these rewards important when selecting a card. The report notes that reward structures like cashback and travel points are a key factor in consumer choice, with many users redeeming rewards frequently. Furthermore, 57% of respondents said they prefer cashback rewards over other types. These findings highlight how integral rewards programs have become in shaping consumer behavior in the credit card market.
As reported by NerdWallet in its 2023 credit card data roundup, general-purpose cardholders in the U.S. redeemed approximately $34.5 billion in rewards in 2022, with an average return of 1.6 cents per dollar spent. However, analysis from industry experts like the Payments Innovation Alliance suggests that proposed regulations such as the CCCA could diminish interchange fees banks receive, which currently fund these rewards. Analysts suggest that if banks are forced to route transactions through lower-fee networks, they may reduce or eliminate rewards programs to compensate for lost revenue.
Sharp currently serves as Executive Director of the ABA’s Card Policy Council, where he leads advocacy and strategy related to credit card policy. According to American Banker, Sharp previously held senior policy roles in the George W. Bush administration and has worked on regulatory and legislative matters concerning financial services.
The ABA, founded in 1875, is a national trade association representing banks across the United States. According to its official website, it advocates for sound banking policy and promotes financial education while providing professional development for banking professionals.