Centennial State News

Jess Sharp, senior vice president of the American Bankers Association (ABA), expressed concerns over government price controls on credit card transactions, stating they risk destabilizing a secure and widely valued system. He made these remarks at the American Bankers Association Summit on April 9.

"It's amazing we're spending so much time talking about a system that works so well," said Sharp. "Your card works just about anywhere you are. This is a very valuable resource. Let's not wreck it with a government price control."

The Credit Card Competition Act (CCCA), reintroduced in 2023 by Senators Dick Durbin and Roger Marshall, aims to increase competition in the U.S. credit card processing market. The bill mandates that banks with over $100 billion in assets enable at least two unaffiliated networks for routing credit card transactions. According to American Banker, this legislation targets Visa and Mastercard's dominance by allowing merchants to choose lower-cost routing options, potentially reducing the $100 billion retailers pay annually in swipe fees. However, critics, including major banking groups, warn it could disrupt fraud protections and raise costs for consumers.

In 2023, U.S. consumers made credit card purchases totaling approximately $19.6 trillion, marking a 3.5% increase from the previous year, as reported by The Motley Fool. Credit cards accounted for 32.61% of all transaction volume, up from 18.18% in 2016, reflecting their growing role in consumer payment preferences. Additionally, over 80% of Americans used either credit or debit cards for everyday purchases, while cash usage fell below 15%. According to data compiled by Clearly Payments and Helcim, the expansion of e-commerce and digital wallets has accelerated these trends.

Historically, government-imposed price controls in the U.S. financial sector have led to unintended economic distortions. As detailed by the Hoover Institution, President Nixon’s 1971 wage and price freezes were a short-term response to inflation but disrupted supply chains and ultimately failed to curb long-term inflation. Additionally, according to a World Bank policy report, interest rate ceilings in various economies restricted access to credit and discouraged bank lending. These examples illustrate how price controls often yield negative side effects on financial efficiency and access.

Sharp is also the Executive Director of the Card Policy Council at the ABA where he leads industry advocacy on credit and debit card policies. As reported by ABA Banking Journal, he previously served as managing director of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness overseeing policy work on derivatives and consumer finance.

The American Bankers Association (ABA), founded in 1875, is the largest banking trade association in the United States representing banks of all sizes on policy matters. According to its official site, its mission is to support banks in promoting economic growth while advocating for a competitive banking system.