Anyone who has made a purchase at a store, restaurant, or gas station in the past year can tell you their own story of rising prices. Consumers are paying more in big and small ways.
And while inflation plays a role in this problem, corporate megastores are cashing in. Those convenience stores, where your wallet feels the pain at the pump, routinely have triple-digit markups—170% for coffee, 262% for ice, and 120% for food, according to our analysis of data from the National Association of Convenience Stores.
That coffee markup doesn’t seem to be enough for them, though. Now these megastores and gas station conglomerates are calling for Congress to pass a law that could see your credit card routed through a processing network you probably have never heard of, instead of the trusted Visa or Mastercard networks your card likely uses today. Supporters of the Durbin-Marshall bill say this will bring down costs and those savings would be passed on to consumers, but research shows that this might not be the case.
A report from the Progressive Policy Institute (PPI) shows the many ways Durbin-Marshall will hurt American consumers—and fail to save them any money in the process. Just look at a similarly misguided law called the Durbin Amendment that passed more than a decade ago.
In 2010, Congress passed the law without debate and despite bipartisan opposition. The then-new law required the Federal Reserve to cap interchange fees for purchases with debit cards.
Instead of using these newfound savings to lower prices for the American people, a 2014 study by the Federal Reserve Bank of Richmond noted that three out of four merchants did not alter their prices after the interchange fee adjustment, and another study from the University of Chicago estimated that consumers missed out on roughly $25 billion in savings after the enactment of the policy.
The Government Accountability Office (GAO) also found that the debit card law had a financial impact beyond costs at the register, as the law resulted in a loss of debit rewards programs and free checking accounts. Lower-income Americans were hit the hardest, with a 2022 report from researchers at the University of Pennsylvania and Georgetown University declaring the Durbin Amendment “led to higher checking account fees paid by consumers.”
It is not hyperbole to say the same would happen if Congress passed Durbin-Marshall. And, again, the American people will be the ones who lose.
Durbin-Marshall jeopardizes the credit card reward programs consumers rely on to buy groceries and gas and defray the cost of visiting family during the holidays. Among credit card holders, 86% have an active rewards card. This includes more than three out of four balance-active cardholders with a household income of less than $50,000.
Supporters of Durbin-Marshall are using the same talking points they used with the Durbin Amendment in an attempt to win support, and when it comes to passing savings along to American families, all they will say is “Trust us.” However, this is just history repeating itself. Corporate megastores have done nothing in the past 13 years to earn the trust or confidence of consumers when it comes to lowering prices.
Members of Congress should remember this as they debate this legislation. History has proved this type of legislation doesn’t work. Data has proved this type of legislation doesn’t work. And the research quite literally proves how American consumers will once again pay the consequences of harmful legislation, years after it is enacted.
Richard Hunt is the Electronic Payments Coalition’s first executive chairman. Hunt is the former president and CEO of the Consumer Bankers Association, which he led for nearly 14 years, building the organization while leading its members through an unprecedented regulatory environment and an extraordinary era of technological change. Visa and Mastercard are members of the Electronic Payments Coalition.
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