Jim Smith

I cannot emphasize enough how important it is that we encourage and incentivize travelers to keep visiting Montana.

Tourists in 2021 spent more than $5 billion in our state. Yellowstone set visitation records in May, June, and July of 2021, and Glacier even had to implement a reservation system for Going-to-the-Sun Road because it got so popular. This activity has been a huge part of our state’s pandemic recovery.

The rise of credit card rewards programs gives us a unique opportunity to support our tourism industry. In 2019 almost 80% of Americans planning to take a summer vacation said they would fund their getaway with a credit card, and about one in three Americans have credit cards that earn travel rewards, according to NerdWallet surveys.

However, some in Congress are considering legislation like the “Credit Card Competition Act of 2022” that would cause rewards programs to lose value and get rid of major incentives to visit Montana.

The Credit Card Competition Act will expand the regulations of the 2010 Durbin Amendment, an amendment that mandated debit card routing requirements for banks. The routing mandates forced banks offering debit cards to add extra, unaffiliated payment networks to their cards, so merchants could have more choice in where their transactions process. Then payment networks across the board lowered their interchange fee rates (the rates they charge to process electronic transactions) to stay competitive, and interchange fee rates became a race to the bottom.

At the time, Sen. Jon Tester stood up against these regulations because he knew the harmful impact they could have on our small businesses, small banks, and consumers. He introduced the Debit Interchange Fee Study Act of 2011 which could have prevented some of this harm, but it did not pass, and consumers paid the price.

Big retailers like Amazon and Target saw much lower fees and gained more than $100 billion in revenue, which they did not use to lower their prices for customers. Banks lost billions, and passed those losses onto consumers by reducing free checking accounts, raising account fees, and eliminating debit card rewards programs.

Fast forward to today and those same big retailers are now peddling the Credit Card Competition Act to extend routing mandates to credit. This new bill text includes no mention of how it will benefit consumers, because they have stopped pretending to have our interests at heart.

Once again, banks will lose billions and recoup their losses at our expense. Credit card interchange fee revenue will drop, and banks of all sizes will raise fees and slash rewards like mileage programs and hotel points. They will also raise fees and credit card restrictions to cut their losses, making credit less accessible to thousands of Montanans and millions of Americans.

We have seen it before, and there is nothing to suggest it will be any different this time. Australia’s Federal Reserve Bank implemented similar credit card policies (a cap on credit card interchange fees) and as a result, credit card interchange fee revenue plummeted. According to a CRA International analysis, rewards cards fees rose by as much as 77% and the value of rewards points fell nearly 25%.

Travelers from all over the country come to see our beautiful national parks, spend money in our hotels and restaurants, and boost our outdoor recreation economy. We need to protect this industry and encourage tourism, instead of gutting credit card travel incentives and making credit cards harder to access. I know Sen. Tester will fight against this corporate greed again and I urge the entire Montana delegation to stand with him.

This column initially appeared at the Daily Montanan