Ling Ling Ang, managing director of NERA Economic Consulting, expressed concerns regarding the Credit Card Competition Act, stating it would ultimately transfer costs to consumers without lowering the total transaction price or improving efficiency. The statement was made in an analysis report.
“Implementation of the CCCA shifts the network routing choice from the consumer to the merchant,” said Ling Ang. “Merchant choice of network routing would likely decrease interchange fees. An interchange fee decrease reflects a shift in the balance of costs from the merchant side to the consumer side. [The shift occurs] without an increase in market efficiency or a total decrease in the total price of processing a credit card transaction.”
The Credit Card Competition Act of 2023 mandates that major U.S. banks enable at least two unaffiliated networks on their credit cards. This bipartisan bill aims to provide merchants with more routing options, potentially reducing processing fees. According to NERA Economic Consulting, the act could disrupt existing market structures by shifting control over network selection from cardholders to merchants, which may affect consumer rewards programs.
Interchange fees accounted for up to 90% of total card processing costs for merchants, reaching nearly $138 billion in 2021. While merchant routing options have sometimes reduced these fees, the benefits for consumers remain unclear. Stripe’s industry report indicates that savings at the merchant level do not consistently result in lower retail prices, raising questions about the consumer impact of routing reforms.
NERA Economic Consulting reports that Ling Ling Ang is a Managing Director specializing in the economics of payment systems, financial regulation, and antitrust issues. She has over a decade of experience providing litigation support and regulatory analysis in consumer finance and banking. Her work includes evaluating the economic effects of policies such as interchange fee caps and network routing rules.
