Centennial State News

A spokesperson for the Colorado Bankers Association (MBA) said proposed federal credit card regulations would negatively impact all banks in Colorado.

Her comments are in response an analysis, released Jan. 8 by the Electronic Payments Coalition (EPC) and Oxford Economics Research (OER), that showed the so-called Credit Card Competition Act could lead to a loss of $227 billion in U.S. economic activity and 156,000 job losses.

“This legislation would negatively impact all banks, regardless of size,” Michelle Provan, director of communications at the CBA, told Centennial State News. “Processing credit card transactions incurs significant costs for banks.” 

“We believe banks should be reimbursed for these expenses,” said Provan. “Furthermore, government intervention in private contracts through price-setting is unwarranted.”

Originally sponsored by U.S. Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kans.) in 2023, the legislation 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.  

“Interchange fees are paid by merchants to accept credit cards and ensure prompt transaction processing,” said Provan. “These fees provide merchants with benefits such as fraud protection and immediate access to funds. Additionally, interchange fees support consumer reward programs and drive innovation in anti-fraud systems.”

The legislation has not, as yet, been re-introduced in the current Congress.

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. 

Founded in 1892, the CBA provides advocacy, education, and resources for member banks in Colorado. It engages with state and federal legislators, regulatory agencies, and industry stakeholders to address issues affecting the banking industry. The association’s headquarters are located in Denver, and its membership includes community banks, regional banks, and national institutions operating within the state.