Legislation aimed at increasing competition in the U.S. credit card industry was introduced this week by Democratic Sen. Dick Durbin and Republican Sen. Roger Marshall, who faced off to challenge Visa and Mastercard’s dominance of the industry. card networks.
The legislation, if passed, would build on previous efforts by Durbin (D-IL) to inject more competition into the industry and dislodge a duopoly that has worked hand in hand with bank card issuers to increase interchange fees for merchants. and retailers.
The bill would generally require merchants to have access to card networks other than Visa and Mastercard to route credit card transactions. Durbin successfully pushed through an amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that imposed a similar requirement on debit transactions.
“This legislation, which builds on pro-competition reforms passed by Congress in 2010, would give small businesses meaningful choice over card networks, and it would allow innovators to gain a foothold in credit cards.” , Durbin said in a press release. issued by senators on Thursday. “Bringing true competition to credit card networks will help lower swipe fees and keep costs down for Main Street merchants and their customers.”
Details of the new legislation has appeared Thursday, after hints of it had circulated in the industry for months.
The senators noted in their statement that Visa and Mastercard reimburse about 83% of general purpose credit cards in the United States, with transactions in the country amounting to $3.49 trillion in payments last year. The fees charged to merchants for these transactions amounted to $77.48 billion last year, including a tranche that goes to Visa and Mastercard as well as those that benefit bank issuers, according to the release.
Earlier this year, Durbin denounced fee increases imposed by card networks and bank card issuers and called for reforms during a Senate Judiciary Committee hearing on the subject in May. Now senators are calling for increased competition to help lower fees.
“When it comes to Main Street vs. Wall Street, I’ll choose Main Street every time,” Marshall said in the statement. “Convenience stores, gas stations and other small businesses in Kansas are being operated by Visa and Mastercard on behalf of New York’s big banks at a time when they, and the communities they serve, are grappling with crippling inflation and watching down the barrel of an impending recession.
The bill already begins the continuation of the battle that has long pitted retailers and merchants on one side against card networks and bank issuers on the other. While supporters of the bill, such as the Merchant Payments Coalition, said it was likely to attract bipartisan support, given its reliance on competition to meet high fees, longtime critics Such measures, including the Electronic Payments Coalition, have already expressed concerns about the bill and seem unlikely to support it.