A bipartisan bill aimed at promoting transparency and competition in the credit card market is gaining both support and opposition as it sits in deliberation with the Committee on Banking, Housing, and Urban Affairs.
Introduced in the Senate at the end of July by Senators Dick Durbin (D-IL) and Roger Marshall, M.D. (R-KS), the Credit Card Competition Act of 2022 calls on the Federal Reserve System to prohibit the current credit duopoly of Mastercard and Visa from “restricting the number of networks on which credit card transactions may be processed,” according to the bill’s 117th Congress summary.
In his opinion piece in Newsweek, former Nevada Senator Dean Heller says that unchecked and rising swipe fees imposed by Visa and Mastercard are pressing businesses to take costs out on customers. Aside from interchange or swipe fees, which Visa and Mastercard force retailers to pay to issuing banks, the two credit card giants charge network fees to merchants.
“Visa and Mastercard are single-handedly setting, and increasing, swipe fees,” claimed Heller. “Even though consumers and small businesses are suffering under record-breaking inflation rates, they increased these fees yet again earlier this year.”
According to Heller, with the two companies controlling about 80% of the credit card market, the bigger banks need to start providing more credit options — a choice of at least two networks that consumers can use to make electronic transactions.
Per Progressive Grocer, the House bill is being championed by many grocery organizations, like FMI (the Food Industry Association) and the National Grocers Association (NGA), who are urging the government to assert control over excessive fees.
“These ‘swipe fees’ have a direct impact on our members’ operations and the viability of their businesses,” said Christopher Jones, SVP of government relations at NGA. “Swipe fees are the second-largest operating costs for grocers and are out of their control.”
However, the bill has also prompted lobbying from agencies opposed to restrictions that the Credit Card Competition Act will bring.
A group of more than 140 organizations, including the Electronic Payments Coalition (EPC), the Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU), have expressed opposition to the bill. These organizations stated that the bill’s passing will result in a cash grab for big box retailers at the expense of consumers, small banks and businesses, according to Financial Regulation News.
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“This unsound legislation fails to recognize the existing, robust competition within the payments network,” said NAFCU President and CEO Dan Berger.
“With no modicum of consideration to the overwhelming risk from untested networks, loss of safe and affordable banking products, and higher credit cost it would pass on to consumers and financial institutions, it’s plain to see this bill is just bad policy all around.”
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This article originally appeared on GOBankingRates.com: Credit Card Swipe Fees Facing Crackdown Legislation