Airline Groups: GENIUS Act Amendment May Erode Credit Card Rewards Ecosystem

The Credit Card Competition Act (CCCA) has drawn criticism from bank and credit union groups, but now prominent players in the airline industry have taken a united stand against the act.

Politicians are seeking to attach the CCCA to the GENIUS Act, but that won’t happen if airline industry stakeholders have their way. A group of airlines, commercial aircraft manufacturers, and airline unions issued a letter to Congress on June 2 to voice their disapproval of coupling the CCCA to the GENIUS Act.

“Americans value and enjoy credit card rewards programs because they reward consumers for dollars that they would be spending no matter what,” the letter stated. “Many may be unpleasantly surprised if Congress disrupts those programs.”

Among the letter’s signees are American Airlines, United Airlines, Airbus, and Boeing, as well as unions, including the International Association of Machinists and Aerospace Workers, and the Allied Pilots Association.

A spokesperson for the Electronic Payments Coalition told Digital Transactions that airlines and airline unions have opposed previous efforts by politicians to further the CCCA, but commercial aircraft manufacturers are joining them to stand against the act for the first time. 

The credit card ecosystem is an interconnected network of businesses, consumers, processes, and technologies. One change to the ecosystem can affect many participants. 

The Electronic Payments Council spokesperson said that the Credit Card Competition Act is often cast as an issue between banks and retailers, but it has the potential to impact many other groups.

Airline credit cards are a popular payment tool consumers use to complete transactions. Data from Airlines for America reveals that almost 25% of U.S. households own at least one airline credit card, and 57% of all the frequent flier rewards issued during 2023 were the result of credit card use. 

But if the Credit Card Competition Act moves forward, both of those numbers stand to dwindle.

The act aims to inject more competition into the payments space, primarily by requiring institutions that issue credit cards and have greater than $100 billion in assets “to enable at least two credit card networks to be used on their credit cards instead of just one, and at least one of those networks must be a network other than the Visa/Mastercard duopoly.”

Nearly 1 out of every 4 households in the U.S. owns at least one airline credit card.

But, according to Airlines for America, the act would also introduce problems into the credit card space. The organization states that the CCCA would empower retailers to process card transactions over networks that are “not necessarily the trusted network selected by the consumer.” 

“What’s worse is that merchants wouldn’t have to pass on to consumers any savings from choosing a different, discount network, but rewards programs would likely be eliminated,” the organization warned.