Sep 21, 2023

Senators urge passage of Credit Card Competition Act

U.S. Senate Majority Whip Dick Durbin (D-IL), chair of the Senate Judiciary Committee, and U.S. Senators Roger Marshall (R-KS) and Peter Welch (D-VT), along with the Merchants Payments Coalition and small business owners from across the country, called on Congress during a press conference to pass their Credit Card Competition Act, bipartisan legislation that aims to enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly.

Last week, the senators sent a letter to Visa and Mastercard insisting on an immediate reversal of their recent plans to increase credit card swipe fees on merchants and consumers again this fall — a move that would cost American businesses and merchants an additional $502 million annually. In the letter, the Senators renewed their calls for competition in the payment processing industry and slammed Visa and Mastercard for their price-gouging tactics at the expense of hard-working Americans.

“American consumers today are concerned about inflation and the high prices of groceries and gas. What they may not know is that the fees charged by Visa and Mastercard when they use their credit card, known as swipe fees, are adding to this problem,” Durbin said. “Merchants have no choice but to accept the outrageous fees if they want to accept credit cards used by their customers. Our bipartisan legislation, which has the support from a wide range of small business owners, would inject real competition in the credit card market. It is long overdue for Congress to break up the sweetheart deal that Visa, Mastercard, and the big banks enjoy. We must bring the bipartisan Credit Card Competition Act to the floor for a vote.”

Added Marshall: “Families’ budgets are being stretched to the absolute limit with little room for error while Wall Street and the Visa-Mastercard duopoly line their pockets. But apparently, Visa-Mastercard’s 50% profit margin is not enough. They are plotting their next payday, announcing they are hiking up their credit card swipe fees on merchants and consumers again this fall. I won’t stand for these massive, wealthy corporations price-gouging small businesses at every turn. Visa and Mastercard’s duopolistic, heavy-handed market practices have disproportionately hurt American families and small businesses for far too long. The credit card market is broken, and we have a solution to fix it. We must pass our bipartisan Credit Card Competition Act.”

Along with Durbin, Marshall and Welch, U.S Senator J.D. Vance (R-OH) also co-introduced the bipartisan bill. Building off of debit card competition reforms enacted by Congress in 2010, the bill would direct the Federal Reserve to ensure that the largest credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed.

“So many of us here in Washington celebrate the American dream of owning a small business, but the truth is it’s far too difficult to make that dream a reality. The brutal exchange fees imposed by credit cards are absolutely abusing Vermont’s merchants,” Welch said. “It’s hard enough to be a small business today, especially as they compete against online retailers and big box stores — now, the growing swipe fees on every transaction are making it harder. The Visa-Mastercard duopoly’s plan to raise interchange fees is just the latest reason to pass the bipartisan Credit Card Competition Act, so we can make it easier for our small businesses to thrive.”

According to the Federal Reserve, Visa and Mastercard account for nearly 576 million cards, or about 83% of general-purpose credit cards. Visa’s and Mastercard’s market power and network structure have enabled them to impose fees on U.S. merchants that are among the world’s highest, charging a total of $93 billion in U.S. merchant credit card fees in 2022. These fees include interchange or swipe fees which Visa and Mastercard require merchants to pay to issuing banks, as well as network fees that Visa and Mastercard require merchants to pay directly to them. Consumers ultimately pay for all of these fees in the price of the goods and services they buy. Interchange fees are the second largest cost for many small businesses — only behind labor costs.