Staff Reports
A new bill in the Senate could help protect Americans from potential security risks associated with a popular Chinese company. The proposed Credit Card Authorization Act not only aims to lower credit card “swipe fees,” but it also includes a provision to identify and monitor payment networks that are considered national security risks or operated by foreign companies.
One of the bill’s sponsors, Sen. Roger Marshall from Kansas, explained that the bill would prevent these risky networks from being used to process credit card payments. This provision is significant because it specifically targets UnionPay, a Chinese state-owned financial services company. UnionPay currently controls a substantial portion of the global credit card spending market and is widely accepted by U.S. merchants.
Bill aimed at reducing credit-card ‘swipe fees’ puts Chinese company in crosshairshttps://t.co/HCkQhyT6av pic.twitter.com/l9AtPWM3Ri
— The Washington Times (@WashTimes) May 14, 2024
Critics argue that UnionPay’s involvement in processing credit cards raises concerns about the potential collection of sensitive financial data on American consumers. They also worry that the company’s membership in the consortium that sets credit card processing standards could give China undue influence in shaping these rules.
Support for the bill transcends political lines, with senators from both the Democratic and Republican parties backing the legislation. Proponents believe that the bill will lead to savings for consumers by reducing swipe fees, which are significant operating costs for merchants. The proposed requirements for banks to offer multiple payment networks to merchants seek to promote competition and potentially lower costs.
Advocates for the bill, such as the National Retail Federation and the National Restaurant Association, argue that these changes will benefit consumers by leading to lower costs and increased competition in the credit card processing industry. They also argue that the bill is essential for protecting consumers’ financial data and privacy.
However, opponents of the bill have raised concerns about its potential impact on credit card rewards and the availability of credit. They argue that the bill may not effectively address the issue of UnionPay’s involvement in credit card processing and could impose significant costs on businesses and consumers.
Overall, the proposed Credit Card Authorization Act seeks to address concerns related to national security risks and the potential exploitation of consumer financial data by foreign entities, particularly a prominent Chinese company. Both supporters and opponents have strong opinions about the bill’s potential effects on consumers, businesses, and the credit card industry.
