Great Lakes Wire

Federal credit card regulations proposed in 2023 could lead to a loss of $227 billion in economic activity and 156,000 job losses, according to an analysis conducted for the Electronic Payments Coalition (EPC) by Oxford Economics Research (OER).

Those regulations are opposed by the Michigan Bankers Association (MBA).

“This study points to yet another alarming consequence of the Durbin-Marshall bill – an economic headwind so strong that the economy will lose a quarter of a trillion dollars of GDP and a disturbing number of jobs,” said Richard Hunt, Chairman of the EPC. “The U.S. economy cannot afford a quarter-trillion dollar hit, and workers in cities across the country should not have to suffer so corporate megastores can pad their profits.”

“Make no mistake, this bill would create a completely avoidable downturn in local communities. It is anti-growth and dangerous economic policy,” said Hunt. 

Originally sponsored by U.S. Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kans.), the so-called Credit Card Competition Act would require banks to offer merchants at least two network options, one of which cannot be Visa or Mastercard, for processing credit card transactions. Opponents to the bill argue that if given the choice, retailers would likely choose cheaper, less secure networks for processing transactions, thereby exposing consumers to increased securities and fraud risks.  

The bill applies to credit cards what a similar measure in 2010, often referred to as the “Durbin Amendment,” applied to debit cards. The 2010 measure was a requirement of the “Dodd–Frank Wall Street Reform and Consumer Protection Act.”

"While we respect Senator Marshall and the other supporters of this bill, they are not being straight with the American people," Patricia Herndon, chief policy officer of the MBA, told Great Lakes Wire in September 2024. "This bill will hurt consumers by ending credit card reward programs and putting their credit card data at risk."

"It will hurt community banks because any changes in routing requirements for the larger institutions will simply get passed down to small banks," said Herndon. "That’s what happened after the first Durbin amendment. It’s fiction to suggest we won’t be affected."

Herndon said the MBA has reached out to both of Michigan's U.S. Senators to let them know of the group's opposition to the bill. She said that Sen. Gary Peters (D-Mich.) voted against the original "Durbin amendment" and that the MBA is "unaware of any change in his position."

Nationally, the bill could result in a $227 billion loss in economic output over approximately four years, driven by a 100 basis point reduction in interchange and an $80 billion decline in discretionary spending, according to the OER study, with regions reliant on travel and recreation spending projected to experience the greatest economic impact from the proposed policy.

OER is a global advisory firm that provides economic forecasting and analysis. The company was founded in 1981 as a commercial venture with Oxford University’s business college. It offers research on economic trends, policy, and industry performance for governments, businesses, and financial institutions. The firm operates offices in various regions, including North America, Europe, and Asia. Oxford Economics produces reports and data covering global and regional economies, industries, and markets.

The EPC is a trade association that represents credit unions, community banks, and payment card networks. The coalition advocates for policies that protect and promote the use of electronic payments.