Gomez: The real dangers of the Credit Card Competition Act

The Credit Card Competition Act (CCCA) poses significant risks to our local businesses, consumers and the vitality of small financial institutions in our community.

While the legislation claims to promote competition, it creates conditions that unfairly disadvantage our local economy, primarily benefiting large retailers through reduced fees. The CCCA threatens popular credit card rewards programs, including cash back and travel benefits. While massive corporations would continue to grow wealthier if the bill is passed, consumers and small businesses would lose out.

I am well-versed in the policies beneficial to citizens, and those crafted to benefit only a select few from my extensive work in local, state and federal policy. In my years as a legislative staffer for San Jose as deputy chief of staff for councilmembers, I strongly advise that opposition be issued, namely by our representative Sen. Alex Padilla.

The legislation of the CCCA would divert money away from community-focused credit programs, such as the Union Plus credit card, which supports workers in times of need. The elimination of credit card rewards and the reduction of interchange revenue would impact credit unions and community banks, weakening their ability to offer valuable programs, cybersecurity protections and access to credit.

Backed by corporate giants like Amazon and Walmart, the CCCA would harm our local economy, small businesses and the broader community. Supporting this bill means voting against consumer interests and popular credit card rewards programs. Past regulatory actions, such as the 2010 debit fee regulation, showed that prices did not decrease. Instead, large retailers pocketed more than $106 billion which should have benefited consumers.

The safety of data and credit card interchange fees is another cause for concern. For instance, the Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, is a prime example of the harmful results of problematic policy change. This type of policy reform benefits corporations while putting consumers at risk.

In the case of the Durbin Amendment, numerous data breaches were threatened due to information such as routing decisions that were transferred to merchants from banks and consumers. Once the Durbin Amendment was enacted, the policy left network securities open for cyberattacks and caused increased expenses for financial exchange sectors. Similar cybersecurity measures could be jeopardized if the CCCA legislation is passed. Our local economy should be safeguarded from these negative effects that outweigh the positives of this policy change.

Moreover, the CCCA would negatively affect the airline industry which employs more than 500,000 people, many in union positions. The loss of revenue from co-branded credit card partnerships would undermine airlines’ financial stability and harm unionized workers negotiating new contracts. The legislation would apply only to Visa and Mastercard while exempting American Express. This would drastically distort competition and unfairly benefit certain airlines while disadvantaging those with a higher union workforce.

Recognizing the detrimental impact the CCCA would have on our California businesses, consumers and small financial institutions is critical for Sen. Padilla. This legislation, masquerading as a tool to promote competition, is a policy that risks the financial security of our constituents.

Enacting this bill would further tip the scales in favor of massive corporations, exacerbating economic inequality. I urge Sen. Padilla to take a firm stance against the CCCA to advocate for the interests of everyday consumers, small businesses and our local economy. He should oppose this unfair legislation that prioritizes corporate profits over the well-being of our citizens and in doing so, protect the vitality of our community.

Victor Gomez is president of Pinnacle Strategy and former mayor of Hollister.