POLICY
As the former Chairman of the New Hampshire Democratic Party Latino Caucus, I am deeply concerned about how the Credit Card Competition Act could harm the Granite State’s underserved communities and the small businesses that serve them.
This bill would let big corporations save money by routing credit card transactions through alternative payment networks.
While this change might seem arcane but harmless, it will hurt minority-owned small businesses and restrict credit access for the communities that need it most.
We know this will happen because Congress has enacted a similar policy for debit cards already. In 2010, Congress passed the Durbin Amendment to cap debit interchange fees.
As a result, local banks and credit unions lost billions of dollars in revenue and many could no longer offer free checking accounts and no-fee debit cards.
At the same time, the unbanked population increased by 1 million Americans, predominantly from already marginalized communities. Small businesses also saw higher interchange fees and reduced access to banking services.
We can expect similar outcomes if Congress doubles down on this failed policy.
When local banks and credit unions lose interchange revenue as a result of this bill, they will have to reduce lending to small businesses, raise interest rates and increase credit card fees.
This means small minority-owned businesses that often operate on tight profit margins could lose an important financial lifeline, forcing them to cut jobs or close shop entirely.
And just like with the original Durbin Amendment, these new routing mandates are not expected to lower interchange costs for small businesses.
Moreover, economists project that 10 to 15 million Americans could lose access to credit if Durbin-style policies are extended to credit cards as a result of banks losing interchange revenue and having to tighten credit requirements.
This would be a devastating blow to working families who rely on no-fee credit cards to cover emergencies or put food on the table.
The real winners of this bill are the nation’s largest retailers. A University of Miami study estimates that the five largest retailers in the country — Walmart, Amazon, Home Depot, Kroger and Costco — are set to pocket $1.2 billion as a result of this bill.
Meanwhile, consumers and small businesses are not expected to see significant savings.
This supposed reform is likely to cause enormous strain for marginalized communities and small businesses. I urge New Hampshire’s Congressional delegation to oppose this flawed bill.
Alejandro Urrutia is currently running for state representative for Hillsborough County District 13. He is currently the vice chairman for the New Hampshire Advisory Committee to the Federal Civil Rights Commission, a member of the Governor’s Advisory Commission on Latino Affairs, president of Latinos Unidos of New Hampshire, and a member of the NH Alliance for Immigrants and Refugees.
