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Elise Baldacci is president of the Maine Credit Union League.
When Mainers hear that credit card “swipe fees” are driving up prices and hurting small businesses, it’s easy to see why the issue is getting attention here at home and in Washington. No one wants unnecessary costs to be passed along at the checkout counter, especially when consumers are paying more for just about every purchase they make.
The Credit Card Competition Act (CCCA) is being promoted as a way to increase competition and lower costs for consumers. In reality, I believe it is a misguided proposal that could weaken fraud protections, disrupt a payment system consumers rely on every day, and produce unintended consequences that outweigh its promised benefits.
For Maine’s credit unions, the stakes are particularly high. As member-owned financial institutions, credit unions reinvest earnings into lower fees, better rates, and personalized service. They also provide critical financing and support to many of Maine’s small businesses. The current system allows credit unions to fight fraud, provide access to credit, and offer competitive products to our members.
In 2010, Congress adopted similar swipe-fee restrictions for debit cards, promising that consumers would benefit from lower prices at the checkout counter. The results tell a different story. Five years later, a study by the Federal Reserve Bank of Richmond found that most retailers did not pass their savings on to consumers. Meanwhile, consumers lost valuable benefits, including rewards programs, and access to free checking accounts declined significantly.
So knowing this history, the data on the CCCA isn’t surprising: nearly all of the projected savings will flow to big box retailers with more than $500 million in annual sales.
The mechanics of the proposal also raise important questions. The bill is often described as introducing “competition,” but what it does is require transactions to be routed over multiple networks, with the merchant choosing which network to use. This distinction matters. By shifting that decision to merchants, the system will naturally prioritize the lowest-cost option, regardless of differences in security, reliability, or the consumer’s best interests. And if they choose a less secure option, it is credit unions that can be on the hook.
The broader economic picture must also be considered. Swipe fees help fund services consumers utilize every day, from fraud protection and access to credit to rewards programs that help families stretch their budgets. For credit unions, that revenue also supports affordable financial services and member benefits that households and businesses depend on. If that revenue is reduced, Mainers could see fewer rewards, weaker protections, and less access to the benefits they value.
The same is true for access to credit. Credit cards are more than a payment tool. For consumers and small businesses alike, they provide an important source of short-term financing. If interchange revenue is reduced, some institutions may scale back card programs, tighten lending standards, or raise interest rates.
None of this is to say the current payments system is perfect. But before making major changes, policymakers should be confident that those changes will deliver the benefits being promised and fully examine the potential tradeoffs.
Mainers and Maine’s small businesses deserve solutions that truly lower costs, protect against fraud, and strengthen our economy. As Sens. Susan Collins and Angus King consider the Credit Card Competition Act, they should carefully weigh out the lessons of the past. Similar federal regulations failed to deliver meaningful savings for consumers while weakening benefits and services many relied on. Maine families, small businesses, and the credit unions that serve them should not be asked to bear those risks again.