Anthony Lamorena, a Federal Government Affairs Fellow at the R Street Institute, expressed concerns regarding the Credit Card Competition Act, suggesting it expands federal authority in a manner that contradicts conservative principles. This statement was made in a commentary published by the R Street Institute.
“Over-regulating credit card interchange and giving the Federal Reserve more power is anything but conservative; in fact, any attempt to do so is a big government power-grab,” said Lamorena. “The Credit Card Competition Act has more unintended consequences than potential benefits.”
The Credit Card Competition Act, introduced in 2023 by Senators Dick Durbin and Roger Marshall, aims to reform the credit card payment ecosystem through bipartisan efforts. The legislation mandates that credit card issuers with assets exceeding $100 billion enable at least two processing networks on their cards, one of which must be different from Visa or Mastercard. Proponents argue that this bill would lower costs and foster innovation by challenging the perceived duopoly in the interchange network market.
According to the Federal Reserve, in 2021, the average fraud loss per debit card transaction was 1.3 cents. Transactions processed over unaffiliated networks experienced higher fraud losses compared to those routed through dual-message networks like Visa and Mastercard, which are known for stronger security protocols. The Credit Card Competition Act would require merchants to enable at least one alternative network, potentially leading to greater use of these less secure systems. This shift could increase consumer exposure to fraud and undermine existing protections tied to more established payment networks.
A report from 2023 by the Congressional Research Service, cited by the Electronic Payments Coalition, found that interchange fee regulations can reduce consumer rewards and shift costs onto cardholders. Based on this analysis, the Coalition warned that the Credit Card Competition Act could significantly impact Virginia consumers by reducing access to credit card rewards and increasing fraud risks. These changes would affect millions of Virginians who rely on credit card benefits for travel, cash back, and everyday expenses.
Lamorena is a Federal Government Affairs Fellow at the R Street Institute with a focus on market-driven financial, technology, and regulatory policy. He has previously held public outreach and legislative roles in both nonprofit and government sectors. His work centers on limiting regulatory overreach while promoting policy innovation.
