Ling Ling Ang, managing director of NERA Economic Consulting, has expressed concerns that lowering interchange fees may lead to reduced rewards for credit card users and increased costs for consumers unable to switch providers. This statement was made in an analysis report.
"A reduction in interchange fees for cards issued by covered card issuers could lead to reductions in credit card rewards from covered issuers," said Ling Ang. "Consumers with options to switch to rewards cards from three-party system or non-covered issuers might do so. Consumers who do not have the option to switch may face lower rewards and higher costs."
The U.S. Credit Card Competition Act of 2023 aims to lower merchant costs by allowing them to choose among competing payment networks, thereby challenging the dominance of Visa and Mastercard. The bill follows the Durbin Amendment’s impact on debit fees and seeks to reduce interchange fees that reached $137.8 billion in 2021. However, critics warn that similar past reforms have had unintended consequences. Economist David Evans estimates consumer losses of $25 billion in rewards value due to reduced bank revenue.
According to LendingTree, the six largest U.S. credit card issuers spent approximately $67.9 billion on reward payments and partner incentives in 2022, underscoring the competitive importance of these programs. These rewards are often funded through interchange fees and are considered crucial for attracting and retaining customers. Industry stakeholders argue that reducing these fees, as proposed in the Credit Card Competition Act, could compel issuers to cut back on generous rewards offerings.
Dr. Xiaoling (Ling Ling) Ang is a Managing Director at NERA Economic Consulting with expertise in consumer finance, antitrust, and regulatory economics, according to her official bio on NERA’s website. She has led economic analysis in litigation and compliance matters and is recognized for her work in banking and labor markets. Dr. Ang applies quantitative methods to assess policy impacts and is frequently retained in high-stakes financial services cases.