The Payments Lobby Cites Harm in Its New Advertising Salvo Against the CCCA

The Electronic Payments Coalition has come out swinging in the new year as it intensifies its fight against the Credit Card Competition Act.

The EPC, which lobbies on behalf of financial institutions and payments networks, late Monday announced it is launching an ad campaign aimed at federal lawmakers. The campaign cites what the group says would be the negative impact passage of the CCCA would have on smaller financial institutions, such as community banks and credit unions.

The campaign, which will comprise nationally targeted digital, radio, and television ads and will run through January, stresses the CCCA will harm small banks and credit unions even though the bill would apply only to financial institutions with $100 billion or more in assets. The bill would require covered institutions to enable at least one network other than Visa or Mastercard for credit card transaction processing.

“There is a so-called exemption in the bill, but there was also one in the Durbin debit-routing legislation and banks of every size saw a decrease in debit interchange as a result. That is a fact from the Fed, not us,” says an EPC spokesperson. “The same thing will happen with this so-called [CCCA] exemption. You can’t rework the entire system and not expect everyone to be impacted as a result. When you squeeze one end of a balloon, the air has to come out somewhere else.”

The Durbin Amendment, which became law more than a decade ago, regulates the interchange banks can earn on debit card transactions, but exempts issuers with $10 billion or less in assets. Sen. Richard Durbin, D.-Ill., the prime mover behind that legislation, is also a co-sponsor of the CCCA. That leads detractors to refer to the bill as “Durbin 2.0.”

Beyond this month, the EPC’s campaign will become part of a planned rotation throughout the year of ads focusing on how the CCCA will impact credit card rewards, access, security, and fraud protection. The EPC says it is dedicating its monthly ad spend to the campaign, but did not reveal the amount.

Several chief executives of trade associations representing financial institutions, including credit unions and community banks, voiced support for the EPC’s efforts. Jim Nussle, chief executive and president America’s Credit Unions, argues the CCCA is a bailout for big-box retailers. Passage of the bill would throw a monkey wrench into the services credit unions provide consumers in underserved and rural communities, he says.

“Credit unions use the small percentage of interchange generated by a purchase to improve options for consumers—data security, more fraud protection, and affordable, reliable access to needed credit,” Nussle says in a statement. “This latest push on Durbin 2.0 will have detrimental effects on Main Street small businesses and consumer wallets that are already feeling the stretch.”

Doug Kantor, an executive committee member at the Merchants Payments Coalition and general counsel for the National Association of Convenience Stores, questions the potential effectiveness the EPC’s ad campaign will have in swaying lawmakers. Legislators, he says, would have to buy into what he claims is misleading and false information the EPC has put out about the CCCA.

“The EPC has repeatedly run ads [opposing the CCCA] that are false, and this is more of the same,” Kantor says.

In response to opponents, Kantor argues it is association executives, not necessarily association members, who are against the CCCA. “When you talk to members directly about the CCCA, the results are mixed,” Kantor says.

In addition, Kantor adds that arguments that small banks and credit unions would be harmed by passage of the CCCA are moot. “No community bank or any bank in Kansas meets the $100-billion-in-assets threshold that would require card issuers to offer a choice of networks, and only one credit union does,” Kantor says. “This is more of the same misleading talk about the entities that would not be regulated by the CCCA.”