Andrew Matthew - PA Images/Getty Images and Bruce Bennett/Getty Images
- US airlines are banding together to criticize the Credit Card Competition Act of 2023.
- They say it will cut revenues of major payment networks, making them pull out of rewards programs.
- The bill, proposed in June, seeks to lower credit card transaction fees from Visa and Mastercard.
US airlines are attacking a new bill in Congress that seeks to lower credit card swipe fees, saying it would effectively end most flyer miles programs.
The Credit Card Competition Act, introduced by Sen. Dick Durbin of Illinois in June, would compel big US banks to let businesses use at least one payment network that isn't Visa or Mastercard for credit card payments.
Durbin is taking aim at what he calls a "Visa-Mastercard duopoly," saying they control over 80% of credit card transactions in the US.
Their dominance in the market allows them to charge transaction fees of around 3% for credit card payments — a cost that businesses usually pass on to their customers through higher prices, Durbin says.
Introducing market competition for Visa and Mastercard would force them to lower their fees, and in turn lower prices for consumers, according to Durbin's bill.
But airlines have come out in force against the bill, saying that cutting revenues from payment networks like Visa and Mastercard would make these platforms far less willing to offer rewards programs like flyer miles.
"Those cards could no longer receive the funding to be able to invest in rewards-back opportunities," Delta Air Lines CEO Ed Bastian told Bloomberg. "It's something that we're watching, obviously."
Many carriers are lobbying against the bill through trade association Airlines for America, which has made opposition against the bill one of its key focuses.
In a statement to Insider, Southwest Airlines said the bill is a "bad policy" that would "undermine, if not completely end, credit card rewards programs."
"Southwest strongly opposes the CCCA," it said.
And when asked to comment on the bill, an American Airlines spokesperson also said the Act would "severely restrict" loyalty rewards.
"Nearly 30 million Americans nationwide hold an airline credit card, and this legislation would destroy cardmembers' ability to earn rewards, miles, and the myriad benefits that go along with cobranded programs," the spokesperson said.
United Airlines CEO Scott Kirby also criticized the bill in an earnings call on October 18, warning that it would "kill" rewards programs.
"84% of US consumers have some kind of rewards card in their wallet. I bet almost everyone in this call has one, and they like them a lot," he said. "Our customers certainly like them a lot. And so I think it'd be hard in Congress to take a vote that 84% of your voters are going to be upset with the outcome of that vote."
Notably, losing credit card rewards programs could create troubles for airlines that go beyond irate customers missing their free miles.
Carriers typically earn billions by partnering with credit card companies to issue co-branded cards. These cards give rewards like miles to consumers on every spend — and pay the airlines each time they're used.
Durbin strikes back
Meanwhile, supporters of the Credit Card Competition Act say the bill won't cause a major disruption to loyalty rewards programs, pointing to how the European Union limits credit card swipe fees to 0.3%.
"Their banks and airlines still offer points and miles programs," Durbin told Insider in a statement.
"It's rich that the airline industry — which generates billions of dollars each year from co-branded credit cards — is pretending to have hardworking Americans' interest at heart," Durbin said.
"The airlines have negotiated sweetheart deals with the biggest Wall Street banks at the expense of consumers and local businesses," he added.
Durbin originally introduced the act to the previous Congress in 2022, but it didn't go to a vote.
As he re-introduced the bill in June, it's garnered bipartisan support, with three Senate co-sponsors across party lines. GOP Rep. Lance Gooden of Texas has also introduced the bill in the House, along with seven co-sponsors from both the Democratic and Republican parties.
Durbin and proponents of the bill also say it will help restaurants, retailers, small businesses, and their customers save $15 billion every year.
"My message to Visa, Mastercard, and the airline giants: don't be afraid of competition," Durbin told Insider.