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The Electronic Payments Coalition issued a press release late Tuesday taking issue with a New York Times op-ed video that argues merchants and consumers already pay a high price for rewards cards and expresses support for the Credit Card Competition Act.
In its rebuttal responding to the video, Richard Hunt, executive chairman of the EPC, describes the claims made in the video as “deceptive” and “erroneous,” and adds they have been “soundly debunked.” The EPC, which represents payments companies and networks, has lobbied against the CCCA since the bill first appeared last year. The CCCA would require financial institutions with $100 billion or more in assets to enable at least one network other than Visa or Mastercard for credit card transaction processing.
The EPC’s rebuttal Tuesday argues passage of the CCCA would harm card networks’ ability to provide data security.
The group in the past has also contended the CCCA would harm card issuers’ ability to fund rewards, as issuers could potentially lose swipe-fee revenues if merchants have an option to route card transaction through a lower-cost alternative to Visa or Mastercard,
“New proposed laws on credit card routing would have consequences for consumers’ data security and their access to credit, all while failing to save them or small businesses any money at all,” Hunt says in the rebuttal. “Every time a consumer makes a purchase using their credit card, they have peace of mind knowing that they are protected from fraud. That’s because merchants and credit card companies make investments—funded by the interchange collected on each purchase—in the data security of their networks.”
Hunt adds that since routing mandates were implemented on debit cards a decade ago, debit card fraud is up 124%, citing a 2015 Economic Brief issued by the Federal Reserve Bank of Richmond. “There is no reason to believe the legislation before Congress would have a different outcome for your credit card,” Hunt says.
The EPC did not respond to phone calls or emails requesting further comment.
In response, the Merchants Payment Coalition, which supports passage of the CCCA, says the information presented in the New York Times video is “straightforward, factual, and correct,” according to Doug Kantor, MPC Executive Committee member and National Association of Convenience Stores general counsel.
“Any time people know more of the facts is good for the CCCA,” Kanor says. “The EPC doesn’t like people knowing the facts about problems with the credit card system today.”
Kantor added the EPC’s claim that passage of the CCCA would harm card-network data security is not a new argument. “Data from the Federal Reserve shows that network competition lowers fraud rates and that the rate of fraud on the Visa and Mastercard networks is [eight] times higher than that of competing networks,” he says. “Networks will have better fraud protection if allowed to compete.”
Kantor points out that after passage of the Durbin Amendment, which capped debit card fees, some debit networks began adopting data encryption as a point of differentiation, which forced other networks to follow suit.
“If the CCCA is passed, it will be a race to the top [for networks] in terms of service and security,” Kantor adds.
