A new bill in Congress is going to 'kill' card rewards programs, says United CEO

• United CEO Scott Kirby says a new bill in Congress is putting miles programs on the chopping block.
• The Credit Card Competition Act, proposed by Sen. Dick Durbin, seeks to lower card swipe fees.

United Airlines CEO Scott Kirby warned last week that airline customers could start seeing their miles programs disappear because of a new bipartisan congressional bill on credit card swipe fees.

"This would kill rewards programs," United CEO Scott Kirby said in an October 18 earnings call. "It would not exist anymore. It will kill debit card rewards programs when it happens, and I think it's bad policy."

The Credit Card Competition Act, proposed by Sen. Dick Durbin of Illinois, seeks to end what Durbin calls a "Visa-Mastercard duopoly" over credit card transactions.

Together, Visa and Mastercard control 80% of US credit card payments, and charge merchants transaction fees of around 2 to 3%, according to a summary of the bill. Retailers and businesses tend to pass the cost of those swipe fees on to their customers, resulting in higher prices for consumers.

Durbin, a Democrat lawmaker who introduced the bill in June, aims to require big US banks to allow at least one other payment network besides Visa or Mastercard to be used in credit card transactions.

The hope here is to introduce competition that would compel the payment giants to lower their fees.

The bill was originally introduced by Durbin in the previous Congress in 2022, though it never came to a vote. Now, it's been re-introduced with growing bipartisan support, including Republican and Democrat co-sponsors in the Senate and House.

But several airlines, which partner with banks to issue miles or loyalty reward points, say the bill will cut Visa and Mastercard's revenues and make them less willing to participate in rewards programs.

Delta Air Lines CEO Ed Bastian told Bloomberg that he predicted banks would stop such partnerships if the bill passed, resulting in "unbelievable" consumer backlash.

"These cards could no longer receive the funding to be able to invest in rewards-back opportunities. It's something that we're watching, obviously," he told the outlet.

In the United earnings call, Kirby criticized Durbin's bill, saying the vast majority of US consumers are on at least one rewards program.

"Almost everyone has one," he said. "And they like them a lot. Our customers certainly like them a lot. And so I think it'd be hard in Congress to take a vote that 84% of your voters are going to be upset with the outcome of that vote."

The death of loyalty programs would also cut deep into airlines' profits.

US carriers that partner with credit cards to offer points or miles programs often get paid each time a customer uses these cards, generating billions in revenue.

Still, supporters of the Credit Card Competition Act say it will create $15 billion in savings for retailers, restaurants, small businesses, and their customers every year. They also argue that big banks will continue to offer reward programs after the bill is passed.

Notably, the European Union already places a hard cap on credit card transaction fees at 0.3%. European banks and airlines still offer points and miles programs to customers.

Durbin did not immediately respond to a request for comment sent outside regular business hours.