Credit card changes could negatively impact Tucson business

Arizona’s scenic beauty, theme parks, and unique museums draw visitors from across the United States and around the world. And it’s because of our vibrant tourism economy that small businesses like mine can thrive. I am the proud owner of TUC Shop, a souvenir shop located in the heart of Tucson. The success of my business depends on Arizona tourism. That’s why we know how important it is to protect Arizona’s thriving tourism industry, which is supported by consumers who use credit card points.

When consumers use credit cards to make purchases, they earn points that can be used to purchase airline tickets or book hotel reservations. According to Airlines for America, nearly 600,000 travelers will use reward points to visit Arizona in 2022, generating more than $916 million in economic impact. This is money spent on eating at restaurants, visiting tourist attractions, and shopping at small businesses in Arizona, including my company.

Unfortunately, lawmakers in Washington are considering legislation that threatens the success of the tourism economy and the small businesses that depend on it. Major retailers are asking Congress to pass the Credit Card Competition Act (CCCA), which would impose a “routing mandate” that would cap interchange fees, the cost of processing transactions. While this bill may sound like a good idea, it would actually have dire consequences for Arizona’s tourism industry and harm Arizona consumers.

CCCA would reduce the revenue card issuers use to fund benefits such as cash back and travel rewards programs. This means benefits programs that hundreds of thousands of visitors rely on to travel to the state each year will have to be cut. These cuts will directly hurt Arizona’s tourism economy and small businesses like mine that depend on a thriving tourism industry. And this is not a guess. The value of reward points has fallen by nearly 25% after the Reserve Bank of Australia capped credit card interchange fees. I fear that CCCA will lead to a similar outcome here.

To make matters worse, if this bill passes, Arizona consumers will not see any savings. When Congress passed a similar bill capping debit exchange fees in 2010, only big retailers saved money and didn’t pass those savings on to consumers in the form of lower prices. There is no reason to expect a different outcome this time, with even Congressional research agencies finding that “it is not clear whether retailers will pass on interchange savings to consumers” as a result of the bill. did.

Just like consumers, small businesses like mine can’t expect to see any savings from this bill. The only people who benefited from the Durbin Amendment were the large retailers who had the power and resources to negotiate lower exchange rates, and they would also benefit from the CCCA. According to a University of Miami study, the nation’s five largest retailers are expected to save more than $1 billion as a result of this bill, while genuine small businesses are expected to save little or nothing.

As a small business owner, you appreciate the convenience of having your customers simply tap or swipe their card at the register. And my customers appreciate the speed and efficiency of electronic payments. However, this system could become less secure if the CCCA becomes law and opens credit cards to alternative, less secure payment networks. The use of these new networks may increase the incidence of fraudulent transactions, and we cannot afford to take this risk.

If the bill becomes law, the biggest winners would be large retailers with the bargaining power and resources to take advantage of route mandates. For the sake of Arizona consumers and small businesses, I hope legislators oppose this flawed and dangerous bill.