Reduced Credit Card Fees for Merchants May Hurt Gambling Tourism

A new federal legislation proposal, the Credit Card Competition Act of 2023, aims to reduce credit card fees charged to merchants. However, these interchange fees also fund rewards programs based on points, providing consumers with benefits like airline miles, hotel credits, and cash-back incentives. The potential change has raised concerns about the measure’s broader impact on industries like gambling.

A Hit to Reward Programs Could Have Unforeseen Consequences

Josh Saltzman, Vice President of Global Government Affairs at Airlines for America, which represents major airlines, emphasized the importance of airline rewards programs, especially for tourism-based economies like Las Vegas. Last year, approximately 808,863 people traveled to Nevada using airline credit card points, generating a substantial economic impact of about $1.2 billion.

Travel credit cards have consistently gained popularity as rewards programs shift toward total dollars spent on the card rather than just miles traveled. These points can be redeemed for free flights, holidays, and other benefits. Any regulatory changes impacting this fragile system would be felt by many consumers, significantly limiting their leisure options.

For a state like Nevada, where travel and tourism is such a big component of the economy, I think the story writes itself.

Josh Saltzman, VP of Global Government Affairs at Airlines for America

Major credit card companies and banks share a similar sentiment, fearing that a proposed reduction in interchange fees could end popular rewards programs. Nevada congressional delegation members have not publicly disclosed their stance on the bill. However, the legislation has garnered significant attention and outreach from constituents.

Open Dialogue Remains Instrumental for Success

The new primarily aims to introduce more competition into the credit card network market, currently dominated by Visa and Mastercard. The legislation does not impose such restrictions on networks with smaller market shares like American Express or Discover, which could benefit most from the measure, potentially creating a more diverse landscape.

However, increased competition could lead to lower credit card fees, reducing revenue for credit card issuers. This legislation could impact services like reward points, creating a ripple effect across multiple industries. Any proposed changes must consider the overall impact on data security and benefit programs, especially in tourism-driven economies.

Overall, the Credit Card Competition Act of 2023 presents a complex challenge of balancing the needs of consumers, retailers, and financial institutions. Stakeholders, constituents, and members of Congress need to undertake extensive discussions to ensure the proposed changes reach their desired effect without negatively impacting adjacent sectors.