Credit Card Competition Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1838 To amend the Electronic Fund Transfer Act to require the Board of Gov- ernors of the Federal Reserve system to prescribe regulations relating to network competition in credit card transactions, and for other pur- poses. IN THE SENATE OF THE UNITED STATES JUNE 7, 2023 Mr. DURBIN (for himself, Mr. MARSHALL, Mr. WELCH, and Mr. VANCE) in- troduced the following bill; which was read twice and referred to the Com- mittee on Banking, Housing, and Urban Affairs A BILL To amend the Electronic Fund Transfer Act to require the Board of Governors of the Federal Reserve system to prescribe regulations relating to network competition in credit card transactions, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Credit Card Competi- 4 tion Act of 2023’’. 5 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1838 IS SEC. 2. COMPETITION IN CREDIT CARD TRANSACTIONS. 1 (a) IN GENERAL.—Section 921 of the Electronic 2 Fund Transfer Act (15 U.S.C. 1693o–2) is amended— 3 (1) in subsection (b)— 4 (A) by redesignating paragraphs (2), (3), 5 and (4) as paragraphs (3), (4), and (5), respec- 6 tively; and 7 (B) by inserting after paragraph (1) the 8 following: 9 ‘‘(2) COMPETITION IN CREDIT CARD TRANS- 10 ACTIONS.— 11 ‘‘(A) NO EXCLUSIVE NETWORK.— 12 ‘‘(i) IN GENERAL.—Not later than 1 13 year after the date of enactment of the 14 Credit Card Competition Act of 2023, the 15 Board shall prescribe regulations providing 16 that a covered card issuer or payment card 17 network shall not directly or through any 18 agent, processor, or licensed member of a 19 payment card network, by contract, re- 20 quirement, condition, penalty, technological 21 specification, or otherwise, restrict the 22 number of payment card networks on 23 which an electronic credit transaction may 24 be processed to— 25 ‘‘(I) 1 such network; 26 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1838 IS ‘‘(II) 2 or more such networks, 1 if— 2 ‘‘(aa) each such network is 3 owned, controlled, or otherwise 4 operated by— 5 ‘‘(AA) affiliated per- 6 sons; or 7 ‘‘(BB) networks affili- 8 ated with such issuer; or 9 ‘‘(bb) any such network is 10 identified on the list established 11 and updated under subparagraph 12 (D); or 13 ‘‘(III) subject to clause (ii), the 2 14 such networks that hold the 2 largest 15 market shares with respect to the 16 number of credit cards issued in the 17 United States by licensed members of 18 such networks (and enabled to be 19 processed through such networks), as 20 determined by the Board on the date 21 on which the Board prescribes the 22 regulations. 23 ‘‘(ii) DETERMINATIONS BY BOARD.— 24 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1838 IS ‘‘(I) IN GENERAL.—The Board, 1 not later than 3 years after the date 2 on which the regulations prescribed 3 under clause (i) take effect, and not 4 less frequently than once every 3 5 years thereafter, shall determine 6 whether the 2 networks identified 7 under clause (i)(III) have changed, as 8 compared with the most recent such 9 determination by the Board. 10 ‘‘(II) EFFECT OF DETERMINA- 11 TION.—If the Board, under subclause 12 (I), determines that the 2 networks 13 described in clause (i)(III) have 14 changed (as compared with the most 15 recent such determination by the 16 Board), clause (i)(III) shall no longer 17 have any force or effect. 18 ‘‘(B) NO ROUTING RESTRICTIONS.—Not 19 later than 1 year after the date of enactment of 20 the Credit Card Competition Act of 2023, the 21 Board shall prescribe regulations providing that 22 a covered card issuer or payment card network 23 shall not— 24 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1838 IS ‘‘(i) directly or through any agent, 1 processor, or licensed member of the net- 2 work, by contract, requirement, condition, 3 penalty, or otherwise— 4 ‘‘(I) inhibit the ability of any per- 5 son who accepts credit cards for pay- 6 ments to direct the routing of elec- 7 tronic credit transactions for proc- 8 essing over any payment card network 9 that— 10 ‘‘(aa) may process such 11 transactions; and 12 ‘‘(bb) is not on the list es- 13 tablished and updated by the 14 Board under subparagraph (D); 15 ‘‘(II) require any person who ac- 16 cepts credit cards for payments to ex- 17 clusively use, for transactions associ- 18 ated with a particular credit card, an 19 authentication, tokenization, or other 20 security technology that cannot be 21 used by all of the payment card net- 22 works that may process electronic 23 credit transactions for that particular 24 credit card; or 25 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1838 IS ‘‘(III) inhibit the ability of an- 1 other payment card network to handle 2 or process electronic credit trans- 3 actions using an authentication, 4 tokenization, or other security tech- 5 nology for the processing of those 6 electronic credit transactions; or 7 ‘‘(ii) impose any penalty or disadvan- 8 tage, financial or otherwise, on any person 9 for— 10 ‘‘(I) choosing to direct the rout- 11 ing of an electronic credit transaction 12 over any payment card network on 13 which the electronic credit transaction 14 may be processed; or 15 ‘‘(II) failing to ensure that a cer- 16 tain number, or aggregate dollar 17 amount, of electronic credit trans- 18 actions are handled by a particular 19 payment card network. 20 ‘‘(C) APPLICABILITY.—The regulations 21 prescribed under subparagraphs (A) and (B) 22 shall not apply to a credit card issued in a 3- 23 party payment system model. 24 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1838 IS ‘‘(D) DESIGNATION OF NATIONAL SECU- 1 RITY RISKS.— 2 ‘‘(i) IN GENERAL.—Not later than 1 3 year after the date of enactment of the 4 Credit Card Competition Act of 2023, the 5 Board, in consultation with the Secretary 6 of the Treasury, shall prescribe regulations 7 to establish a public list of any payment 8 card network— 9 ‘‘(I) the processing of electronic 10 credit transactions by which is deter- 11 mined by the Board to pose a risk to 12 the national security of the United 13 States; or 14 ‘‘(II) that is owned, operated, or 15 sponsored by a foreign state entity. 16 ‘‘(ii) UPDATING OF LIST.—Not less 17 frequently than once every 2 years after 18 the date on which the Board establishes 19 the public list required under clause (i), 20 the Board, in consultation with the Sec- 21 retary of the Treasury, shall update that 22 list. 23 ‘‘(E) DEFINITIONS.—In this paragraph— 24 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1838 IS ‘‘(i) the terms ‘card issuer’ and ‘cred- 1 itor’ have the meanings given the terms in 2 section 103 of the Truth in Lending Act 3 (15 U.S.C. 1602); 4 ‘‘(ii) the term ‘covered card issuer’ 5 means a card issuer that, together with the 6 affiliates of the card issuer, has assets of 7 more than $100,000,000,000; 8 ‘‘(iii) the term ‘credit card issued in a 9 3-party payment system model’ means a 10 credit card issued by a card issuer that 11 is— 12 ‘‘(I) the payment card network 13 with respect to the credit card; or 14 ‘‘(II) under common ownership 15 with the payment card network with 16 respect to the credit card; 17 ‘‘(iv) the term ‘electronic credit trans- 18 action’— 19 ‘‘(I) means a transaction in 20 which a person uses a credit card; and 21 ‘‘(II) includes a transaction in 22 which a person does not physically 23 present a credit card for payment, in- 24 cluding a transaction involving the 25 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1838 IS entry of credit card information onto, 1 or use of credit card information in 2 conjunction with, a website interface 3 or a mobile telephone application; and 4 ‘‘(v) the term ‘licensed member’ in- 5 cludes, with respect to a payment card net- 6 work— 7 ‘‘(I) a creditor or card issuer that 8 is authorized to issue credit cards 9 bearing any logo of the payment card 10 network; and 11 ‘‘(II) any person, including any 12 financial institution and any person 13 that may be referred to as an 14 ‘acquirer’, that is authorized to— 15 ‘‘(aa) screen and accept any 16 person into any program under 17 which that person may accept, 18 for payment for goods or serv- 19 ices, a credit card bearing any 20 logo of the payment card net- 21 work; 22 ‘‘(bb) process transactions 23 on behalf of any person who ac- 24 VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1838 IS cepts credit cards for payments; 1 and 2 ‘‘(cc) complete financial set- 3 tlement of any transaction on be- 4 half of a person who accepts 5 credit cards for payments.’’; and 6 (2) in subsection (d)(1), by inserting ‘‘, except 7 that the Bureau shall not have authority to enforce 8 the requirements of this section or any regulations 9 prescribed by the Board under this section’’ after 10 ‘‘section 918’’. 11 (b) EFFECTIVE DATE.—Each set of regulations pre- 12 scribed by the Board of Governors of the Federal Reserve 13 System under paragraph (2) of section 921(b) of the Elec- 14 tronic Fund Transfer Act (15 U.S.C. 1693o–2(b)), as 15 amended by subsection (a) of this section, shall take effect 16 on the date that is 180 days after the date on which the 17 Board prescribes the final version of that set of regula- 18 tions. 19 Æ VerDate Sep 11 2014 23:34 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1838.IS S1838 kjohnson on DSK79L0C42PROD with BILLS