Credit Card Competition Act and Florida Tourism
A bill being debated in Congress could have major impacts to Central Florida’s economy, especially tourism.
Spring Break is a major part of the travel season for Florida.
In 2023, Visit Orlando reported that March and April account for 15% to 20% of domestic travel to Orlando, making Spring Break the peak season for the area.
The proposed Credit Card Competition Act aims to bring more competition and choice into the U.S. credit card network market, which sponsors of the bill say are dominated by Visa and Mastercard.
The bill would allow merchants the option of processing interchange fees through any credit card network.
“When you use your credit card to make a purchase, it goes through payment networks, and those payment networks like Visa or MasterCard, charge the merchants interchange fees. And that's the main way they make money,” said Randall Croom, Associate Professor of Management at Stetson University.
For example, if you swipe a Visa card at the store, the merchant must use the Visa network and pay their interchange fee.
The Credit Card Competition Act will allow merchants to use the Visa network or have the option to use a less expensive network to process those fees.
Proponents of the bill say it will lower some operating costs for businesses, while opponents say it could take away the rewards credit card companies offer due to the loss in revenue.
Croom said that decrease in rewards could have a negative impact on tourism in Central Florida.
“And that's because many of the rewards that credit cards offer are for flights and hotels, discounts on destinations. It’s how some people pay for some or most of their big travel plans.”
If people can’t rely on the benefits from their credit card rewards to help fund part or all of their trip, Croom said that may make them scale back their travel plans to Florida
“It also could mean that even when people do come, they might have less discretionary money to spend on their vacation because they spend more on the flights and hotels, which would have previously been taken care of by their credit card benefit.”
Croom said that could also impact some jobs in the hospitality industry that rely on the influx of visitors.
Florida Debt
Lending Tree reports that Florida is in the top 10 states with the most credit card debt among residents.
The average credit card debt per Florida resident at the end of 2023 was $7,937.
Although credit cards can be helpful for many people, Croom said revolving debt represents a threat to financial well-being.
“Carrying a high balance makes things more fraught for people. So longer term, when you have headwinds like inflation, high housing and grocery prices, and if you add to that high revolving consumer debt, you certainly increase the risk for everyday consumers. You're less able to absorb shocks. It could get kind of ugly to tell you the truth.”
