Proposed Credit Card Competition Act is bad for tourism

The tourism industry here in Colorado recovered quickly from pandemic lows and has stabilized in the last several months thanks to a resurgence of new travelers looking to visit. This has bolstered our local vendors and businesses, adding to our expanding economy. However, I fear that a bill currently moving through Congress may threaten this growth and limit future opportunities for our community to attract new visitors. Under the Credit Card Competition Act (CCCA), consumers would lose access to key travel rewards to grow the profits of big box retailers.

When the legislation was originally introduced last year, lawmakers on both sides of the aisle agreed that it would clearly harm everyday consumers. Even so, the original sponsors are now attempting to sneak the bill’s language into any legislation, including the National Defense Authorization Act. This would harm various sectors of our economy and cannot be allowed to move forward.

As written, the CCCA would compel banks to develop additional routing systems for credit card transactions. This proposed legislation is backed by large retailers, who see an opportunity to make a huge profit by selecting cheaper payment networks that offer fewer interchange fees. These fees are crucial for generating revenue that maintains key consumer safeguards, travel insurance, and key consumer credit card rewards programs that families have come to rely on.

These changes to the interchange system would force banks to charge fees for cards, reduce access to credit for struggling families, and slash their rewards programs. Many consumers would lose the ability to earn airline miles. Forbes recently detailed how various airlines in the United States sell frequent flier miles to banks, who apply them to credit card rewards programs. Not only does this make a profit for airlines, but it also helps reduce flight ticket prices. Eliminating such rewards under the CCCA would create a domino effect that leads to higher plane ticket costs that make it more expensive to travel to states like ours.

Now that travel rewards programs would no longer be available, travel costs would increase across the board. With surveys showing that 80% of Americans use a credit card to fund their summer vacations, this loss of rewards would lead to fewer tourists visiting Colorado every year. They would also consume less if they do decide to visit, as they would be hesitant to spend money dining at our restaurants, staying at our hotels, or visiting our parks. This reduction in business would leave our local vendors and establishments in financial uncertainty, harming our region’s economy in the long run. Overall, enacting the CCCA into law would cost consumers a staggering $50 billion annually in vanished benefits.

Supporters of the CCA maintain that big box stores will pass on savings to consumers in the form of cheaper goods. This couldn’t be further from the truth. As we saw in 2010 following the passage of a similar bill relating to debit cards, large retailers raked in over $100 billion while consumers were left at the bottom of the barrel. According to research conducted at the University of Chicago Coarse-Sander Institute for Law and Economics, consumers lost rewards and were left to foot the bill following this debit card legislation.

Big box retailers would be the sole beneficiaries of the CCCA. Meanwhile, we would miss out on rewards and benefits that could be spent here by travelers visiting our state. To that end, it is absolutely essential that the Colorado congressional delegation stands against this legislation to protect our communities.

Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com