Banking

Column: Credit card routing costs threatens benefits programs

A suggested costs looking for to enforce network routing requirements on banks that release charge card would be devastating for customers, specifically the countless individuals who get enormous worth from cash-back and travel benefits on charge card deals, composes Brian Kelly, creator of the popular commitment programs, charge card and take a trip news website The Points Guy. In a brand-new column on the website, Kelly slams the just recently reestablished Credit Card Competition Act by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) for putting the interests of big-box shops ahead of consumers by permitting sellers to select more affordable, less-safe charge card processing networks. (A buddy costs likewise was presented in the House.) He likewise advises customers to voice their opposition to the costs.

“Simply put, it would kill the funding for credit card rewards programs and allow retailers to pocket the savings from lower interchange fees (also known as swipe fees),” Kelly composes. “With lower fees collected, consumers would lose out on rewards, purchase protection and fraud protection while retailers add to their bottom line.”

Kelly keeps in mind that a comparable scenario played out a years earlier with the passage of the Durbin modification to the Dodd-Frank Act and its constraints on debit deals. Debit card rewards programs disappeared, hurting lower-income consumers who might have a difficult time getting authorized for charge card, he composes. A Federal Reserve research study discovered sellers didn’t hand down the cost savings to consumers however rather held rates consistent or—in a lot of cases—increased rates.

“The retail lobbyists are trying to convince consumers that this would lead to lower prices; however, we know that retailers won’t pass along those savings, because we know the impact of the Durbin amendment, and it was a huge loss for consumers,” Kelly composes.

Video: Kelly talked to on CNBC about the Credit Card Competition Act

Gabriel

A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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