Bill Overview
Title: Credit Card Competition Act of 2022
Description: This bill addresses network access and competition in electronic credit transactions. The bill generally prohibits credit card issuers from restricting the number of payment card networks on which an electronic credit transaction may be processed. Specifically, the Board of Governors of the Federal Reserve System must prohibit certain credit card issuers with assets of over $100 billion from restricting the number of networks on which credit card transactions may be processed to one network, two or more networks operated by affiliated networks or persons, or the two networks with the largest market share of credit cards issued. Additionally, credit card issuers are prohibited from imposing certain limitations on the routing of electronic credit transactions, such as through penalties for failure to meet a specified threshold of transactions on a particular payment card network. The board must also provide for the designation of payment card networks that pose a security risk to the United States or are owned, operated, or sponsored by a foreign state entity.
Sponsors: Rep. Welch, Peter [D-VT-At Large]
Target Audience
Population: Credit card holders globally
Estimated Size: 250000000
- The bill affects credit card issuers with assets over $100 billion, which could lead to changes in fee structures or services provided by these issuers.
- Credit card holders who rely on these large networks may experience changes in network availability that could affect transaction routing and security.
- Consumers could potentially benefit from increased competition, which may lead to reduced fees or improved services.
- Merchants may experience changes in transaction fees or processing methods due to increased competition among networks.
- The increased competition and changes to transaction routing could impact global credit card markets, as many large issuers operate internationally.
Reasoning
- Credit card holders largely in the adult population might see slight increased options due to the policy, potentially improving satisfaction due to lower fees or better services.
- Merchants in the U.S. will likely experience direct impact through changes in transaction fees and routing options, affecting their financial operations.
- The policy primarily affects large issuers with over $100 billion in assets, indicating that smaller credit card issuers and their customers won't be directly impacted.
- Paying for card network integrations amongst diverse networks might incur costs, impacting how widely these changes affect end-users due to budget constraints.
- Security checks for networks owned or sponsored by foreign state entities may bring geopolitical perspectives into consumer choices, but unlikely to impact Cantril scores unless drastic.
Simulated Interviews
Retail Merchant (New York, NY)
Age: 36 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I worry about transaction fees hurting my bottom line, but competition could help lower them.
- The changes to networks seem complex; I hope they make it easier, not harder, to get paid.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
IT Consultant (Los Angeles, CA)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Increased competition could lower my fees or provide better payment security.
- I hope international transactions become smoother and cheaper.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Software Developer (Austin, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- I'm hopeful competition will increase data security and transactions will be more reliable.
- Lower fees would be nice, but my main concern is network security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
Retired Teacher (Miami, FL)
Age: 62 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- I don't expect major changes for me, but it'd be great if fees were reduced.
- Network changes sound intimidating; I prefer simplicity in my transactions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Healthcare Worker (Chicago, IL)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 11/20
Statement of Opinion:
- Changes might help my family save on fees without much hassle.
- I hope the routed transactions are simple and straightforward.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Graduate Student (Seattle, WA)
Age: 25 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- If the policy reduces fees, it could be helpful when I do use my card.
- I'm worried about added complexity that could confuse me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Event Planner (Phoenix, AZ)
Age: 42 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 6/20
Statement of Opinion:
- The policy could introduce more competitive rewards options, which would be great.
- I expect some initial confusion with network choices, but hopeful for better deals.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Truck Driver (Columbus, OH)
Age: 47 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- Savings on transaction fees would make a big difference.
- The complexity of network changes worries me. I prefer straightforward fee structures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Bank Manager (Denver, CO)
Age: 55 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- The policy looks promising for competition but its practicality depends on implementation.
- Security concerns regarding foreign network involvement need scrutiny.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Freelance Artist (Portland, OR)
Age: 60 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 1.0 years
Commonness: 5/20
Statement of Opinion:
- I don't use credit cards much, so I'm indifferent.
- If the policy lowers fees substantially, I might use them more.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $200000000 (Low: $150000000, High: $250000000)
Year 2: $200000000 (Low: $150000000, High: $250000000)
Year 3: $205000000 (Low: $155000000, High: $255000000)
Year 5: $210000000 (Low: $160000000, High: $260000000)
Year 10: $225000000 (Low: $170000000, High: $280000000)
Year 100: $500000000 (Low: $400000000, High: $600000000)
Key Considerations
- The adaptation requirements for credit card issuers might lead to upfront costs and require changes in current operations and infrastructure.
- The policy could face resistance from major credit card issuers due to potential impacts on their market share and profit margins.
- There is a potential for increased consumer protection and security concerns that need to be addressed by the Federal Reserve oversight.
- The policy could spur ongoing regulatory costs associated with monitoring compliance and security risks.
- Responses from credit card issuers could range from passing costs to consumers to innovative cost mitigations.