On Thursday, Demand Progress released a New report This reveals how the financial services industry has invested nearly $200 million in advocacy efforts focused on preventing passage of the Credit Card Competition Act (CCCA), a bipartisan reform that would introduce competition into the payment system.
The report details how these efforts include not only money spent on lobbying and campaign contributions, but also aggressive and deceptive advertising and paid propaganda designed to convey the impression of popular support for the current regime, which is highly profitable for Visa, MasterCard, and the major banks that issue credit cards.
“For a combination of misleading claims and massive financial power, Wall Street’s defense of credit cards is truly remarkable.” said Carter Dougherty, senior fellow in antitrust and finance at Demand Progress. “Visa, MasterCard and the big banks have money on their side, but they only have empty arguments, so this kind of campaign is the result.”
A striking example of the astronomical promotion of this industry is the Small Business Payments Alliance. The group, run by a New York public relations firm, is spreading around videos of anti-reform testimony from small businesses that received money from Visa and MasterCard. The Points Guy, a popular credit card website, has also partnered with the industry to fight the change.
The report, “How Wall Street’s Money Is Misled,” includes detailed evidence of how the credit card industry:
- Pumps money into political campaigns
- It spends heavily on lobbying in Washington and states that have sought to pass additional payment reforms
- Uses advertising in selected markets
- It funds various groups and websites to communicate widespread support for its position
The Credit Card Competition Act aims to introduce competition into the payment system by allowing merchants to route credit card transactions over networks other than Visa or Mastercard. In the Senate, Senators Richard Durbin (D-Ill.) and Roger Marshall (R-Kansas) are co-sponsors of the bill. In the House, cosponsors are Reps. Zoe Lofgren (D-Calif.) and Lance Gooden (R-Texas). The draft law will be applied on the condition that the card is issued by a bank with assets of more than $100 billion, which is the minimum that covers the oligopoly of giant banks whose cards are used in most transactions. It enjoys the support of a wide range of consumer advocates, antitrust advocates, and small businesses. A fact sheet about the CCCA can be found here here.
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