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Federal Reform of Credit Card Competition Heats Up
from CSN-1022
by ensembleiq
Retail groups applaud the bipartisan efforts in Congress to address high swipe fees
U.S. REPS. Peter Welch (D-Vt.) and Lance Gooden (R-Texas) introduced a bipartisan bill that takes aim at the high swipe fees that are paid by businesses and passed on to customers. It is companion legislation to the Senate’s Credit Card Competition Act of 2022.
“Credit card companies and mega banks keep finding new ways to squeeze our small retailers in Vermont,” Welch said. “In a well-functioning market there is competition and choice. That does not exist in our current credit card network market.
“This bipartisan bill will correct that and bring much needed competition to the VisaMastercard duopoly,” he continued. “This long-overdue bill will help our small businesses thrive and lower household costs for families at a time when they really need it.”
The bill follows the U.S. Senate version, S. 4674, that Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kan.) introduced in July. If passed into law, the Credit Card Competition Act would require the largest U.S. banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks. NACS endorsed both the House and Senate versions of the legislation. The association noted that convenience store swipe fees totaled $14 billion in 2021, which was a 26 percent increase over the previous year. During the first half of 2022, credit card swipe fees were up another 33 percent.
“These fees are simply outrageous because there is no competition. Our stores compete every day for consumers’ business — as does every other business in the country,” said NACS President and CEO Henry Armour. “This competition also drives innovation. In the broken credit card market, no competition means a lack of innovation and an open invitation for these large multinational corporations to continually increase rates and take advantage of a system that only benefits them.”
According to payments consulting firm CMSPI, credit card routing competition would reduce swipe fees by $11 billion or more annually.
The National Retail Federation stated that the introduction of the House bill shows that the pro-consumer legislation is rapidly gaining momentum in Congress. The Retail Industry Leaders Association joined in applauding the House bill.
