Anthony Lamorena, Senior Federal Affairs Manager at the R Street Institute, said that savings from interchange fees under the Credit Card Competition Act (CCCA) are unlikely to benefit consumers. The statement was made in an analysis.
"It is not clear whether retailers would pass interchange savings on to consumers," said Lamorena. "It is unlikely a small business would be aware of a smaller network, and even if it did offer payment on that network, the odds that a bank would issue a card enabled for that exact network are relatively small."
According to Truth on the Market, the CCCA aims to increase competition among card networks to lower interchange fees. However, the proposed changes may not benefit consumers, as businesses are not required to pass on savings. Critics argue that the measure could disrupt existing payment systems without achieving its intended outcome.
The National Association of Federally-Insured Credit Unions (NAFCU) indicated that the CCCA could negatively impact consumers by increasing costs and reducing credit card rewards. Similar past efforts failed because savings from interchange fee reductions were not passed on to consumers. The bill could also undermine current payment network efficiencies.
The Mercatus Center suggested that regulating consumer credit through policies like the CCCA can lead to unintended consequences, such as reduced access to credit and fewer consumer choices. Regulatory interventions may increase compliance costs for financial institutions, potentially reducing the availability of affordable credit. These measures could also hinder innovation in payment systems.
Lamorena has been with the R Street Institute for over five years and currently serves as Senior Federal Affairs Manager, overseeing federal advocacy for Criminal Justice, Finance, Insurance & Trade (FIT), and Competition programs.