Credit Card Competition Act puts retailers' profits before our data security WashTimesOpEd
The misnamed Credit Card Competition Act would regulate the nominal fees merchants pay each time they accept a credit card. These interchange and network fees are set by the networks that process transactions — think Visa or Mastercard. They underwrite the infrastructure that handles hundreds of billions of credit card transactions each year.
Merchants are likely to pick a network with the lowest fees — even if it’s not the most secure. After all, they’re not liable if criminals steal their customers’ financial information. The costs associated with policing fraud are rising. For example, Visa employs 600 cybersecurity experts and has invested more than $500 million in artificial intelligence, data infrastructure and technology to help prevent fraud in the last five years.
Interchange fees help shield customers from those costs. If the Senate gives retailers the right to opt for low-cost, insecure payment networks, then fraud could become even more prevalent. Consumers could end up paying significantly more for all kinds of financial services, from credit cards to checking accounts.
Retailers’ war on interchange and network fees is shortsighted. The fees typically amount to just 2% of a purchase. That’s a drop in the bucket compared with the benefits retailers receive when they accept credit cards. That’s partly why nearly 11 million retailers accept at least one major credit card —Visa, Mastercard, American Express and Discover.
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