Dwan Walker: Credit card bill bad for Pennsylvanians
Share this post:
Here in Aliquippa and other communities like ours across Western Pennsylvania, we’re seeing how the hard work and determination of our ordinary citizens directly contributes to the strength and resolve of our commonwealth. Bouncing back in the aftermath of a global pandemic has not been easy, but our neighbors are getting back to work, taking chances on opening or reopening small businesses and doing what they can to provide for their families.
But a new bill in Congress that takes aim at the credit card market threatens to make all this more difficult for average Pennsylvanians, and particularly our neighbors in Black and brown communities.
The African American community is often disproportionately impacted by the barriers that everyday Americans see to credit and capital access. Being able to obtain and grow credit makes recoveries like the ones we have seen possible, but if consumers cannot access credit, they are left behind.
That’s why I must oppose the Credit Card Competition Act of 2023 (CCCA), a bill just introduced in the U.S. Senate that would have deep ripple effects in Black and brown communities at a critical time when we are trying to foster business growth and give average citizens a leg up.
Having access to credit is tremendously important in today’s modern economy, and particularly in diverse communities that have long faced barriers to equal access for banking and credit services. Credit cards allow us to build a credit history so we can compete for the best interest rates for mortgages or auto loans, and most cards today earn rewards like cash back on everyday expenses such as groceries. While we might not often think about it, responsibly using credit cards can create opportunities that lift our communities. However, those backing the CCCA — huge corporate retailers like Walmart and Amazon — will make credit more expensive and less accessible to many Pennsylvanians.
This bill gives superstores a huge break on interchange fees, which are the fees they pay to process electronic payments when we purchase goods and services with our credit cards. They stand to make an extra $40 billion to $50 billion a year from this bill alone, shifting the financial burden to companies who offer credit cards to consumers, and we will end up paying the price.
Interchange fees help ensure credit cards are the safest way to purchase goods and services, whether online or in person. Interchange fees fund fraud protection services and provide incentives for banks and credit card companies to take a risk lending to new borrowers. If banks respond to these changes like they did when similar legislation was passed affecting the debit card market, we can expect increased interest rates, additional fees and added difficulty when applying for credit.
Community banks and credit unions — often the most easily accessible banking institutions for communities of color — stand to lose billions. The bill will generate an industry-wide impact, and the banks will have to make up the lost revenue somewhere. We know this will be the response to the CCCA because we’ve seen this happen before. Over a decade ago, the Durbin Amendment instituted similar changes to the debit card market that they are now trying to do to credit cards via the CCCA. While initially sold as a consumer rights measure, consumers lost between $22 and $25 billion as banks tried to balance their losses by drastically reducing the availability of free checking accounts and adding new fees to standard banking services.
Over 1 million Americans lost access to free checking accounts in the wake of the Durbin Amendment, disproportionately from lower income and Black and brown communities. The same backers of the CCCA — the big box retailers who have already displaced too many small businesses in our commonwealth — aren’t even pretending that this is a consumer rights issue this time as consumers aren’t even mentioned in the legislation.
Our communities have worked so hard to lead an economic recovery in recent years, but many hard-working people have yet to realize those gains, so it is my hope that our legislators won’t inadvertently add one more hurdle for us to overcome when there is still so much work left to do to strengthen our economy and lift up Black and brown communities in the process.
I’m calling on Congress to reject the Credit Card Competition Act. I trust that our excellent senators in Pennsylvania will look out for the best interests of our communities, and I hope that their colleagues will do the same.
Dwan Walker is mayor of Aliquippa.