The Sconi

Indraneel Chakraborty, a Professor of Finance at the Miami Herbert Business School, University of Miami, has expressed concerns regarding the Credit Card Competition Act (CCCA). He said that the act would significantly reduce revenue for community banks and credit unions. This statement was made in a research paper.

"We estimate that such an exemption would reduce revenue for community banks and credit unions by nearly $1.6 billion per annum," said Chakraborty.

According to Congress.gov, the Credit Card Competition Act of 2023, introduced in the Senate as S.1838, aims to enhance competition in the credit card market by requiring larger financial institutions to offer at least two network options for transactions. The bill seeks to reduce merchant costs associated with credit card fees. Proponents argue that increased competition among networks could benefit consumers through lower prices.

The Electronic Payments Coalition reported that the Credit Card Competition Act of 2022 failed due to strong opposition from small financial institutions and credit unions. They argued it would reduce revenue used to fund fraud protection and consumer rewards. The coalition said that the legislation would have led to fewer choices and higher consumer costs and noted it would have disrupted the existing payment infrastructure.

The Wisconsin Bankers Association argues that the Credit Card Competition Act could negatively impact local financial institutions by reducing their interchange fee revenue, which is essential for covering fraud protection and customer services. They said that rural and small-town banks would be disproportionately affected, leading to reduced credit access in these communities.

Chakraborty specializes in financial intermediation and banking, focusing on regulatory changes' impact on financial institutions. He has authored numerous academic papers analyzing policy effects on community banking.