Could the Credit Card Competition Act impact credit unions?

The Credit Card Competition Act won't directly impact most credit unions, but concerns over ripple effects exist.

Credit unions are among the few institutions where consumers can go to save on fees and interest rates for different banking services and loans. These not-for-profit cooperative financial institutions are owned by their members and return profits to them in the form of such savings. But a bipartisan bill first introduced in the U.S. Senate in 2022 could impact the ability of credit unions to provide those benefits, according to some opponents of the measure.

The Credit Card Competition Act would require financial institutions with more than $100 billion in assets to provide merchants with more choice when it comes to which payment network can process credit card purchases made in their stores. The bill’s supporters say introducing such options will help drive down costs for merchants and, in turn, for consumers.

Currently, when a consumer makes a purchase with a credit card, the merchant pays what’s known as an interchange fee to accept that payment and have it processed securely by the card’s payment network (typically Visa, Mastercard, American Express or Discover). That fee, set by the payment network the credit card runs on, is usually between 1% and 3% of the transaction — and many merchants have long complained that it’s too costly. The bill would give merchants the ability to choose a different network to process its transactions (a Visa card wouldn’t have to run on the Visa network, for example), and proponents of the bill believe that more choices will beget lower fees.

Most credit unions fall below the $100 billion asset requirement and wouldn’t be directly impacted by the proposed bill. But some fear the potential domino effect that this bill may have on these institutions’ ability to give back to their communities.


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