Abstract
We consider the potential economic impacts of the Credit Card Competition Act of 2023 ("CCCA"), drawing on economic literature on two-sided markets and effects of previous U.S. regulatory policy associated with payment cards. Implementation of the CCCA shifts network routing choice from the consumer side of the market to the merchant side of the market. While this would likely decrease interchange fees, an interchange fee decrease only reflects a shift in the balance of costs from the merchant side to the consumer side not a decrease in the total price of processing a credit card transaction. A reduction in interchange fees for cards issued by covered card issuers could lead to reductions in rewards from covered issuers and would likely disproportionately reduce access to reward points for groups with low credit quality. The CCCA will not necessarily decrease the total price of processing a credit card transaction, regardless of its impacts on interchange fees. We find that the exclusion of three party system issuers from CCCA coverage could potentially artificially advantage three-party systems over covered issuers and covered four party systems networks. The net effect on consumers from the entry of additional four-party system networks due to the CCCA is ambiguous.
First Page
149
Recommended Citation
Ling Ling
Ang
,
Alan
Grant
&
Peter
Traber
Potential Economic Impacts of the Credit Card Competition Act of 2023,
36
Loy. Consumer L. Rev.
149
(2025).
Available at:
https://lawecommons.luc.edu/lclr/vol36/iss2/2