Merchants Welcome House Introduction of Credit Card Competition Act

Contact: J. Craig Shearman
(202) 257-3678

WASHINGTON, September 19, 2022 – The Merchants Payments Coalition welcomed today’s House introduction of the Credit Card Competition Act by Representatives Peter Welch, D-Vt., and Lance Gooden, R-Texas.

“The Credit Card Competition Act will help Main Street businesses and consumers deal with credit card swipe fees that have exploded to more than $900 per American family each year,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Representatives Welch and Gooden should be commended for their willingness to stand up against powerful Wall Street megabanks that all agree to charge the same centrally fixed prices to the detriment of American consumers and small businesses.”

“U.S. swipe fees are the highest in the industrialized world and the card industry wants to keep them hidden so American families don’t know how much they’re paying,” Kantor said. “This legislation would make card networks compete and give them incentives to improve service and security while keeping costs in check. It would also close a glaring security gap that today allows any bank to follow the lead of Visa and Mastercard by bringing China’s UnionPay further into U.S. payments.”

Welch and Gooden introduced the bill in the House today, less than two months after the same measure was introduced in the Senate as S. 4674 by Senators Richard Durbin, D-Ill., and Roger Marshall, R-Kan. Introduction comes a week after more than 200 merchant trade associations and nearly 1,700 merchant companies – including hundreds of small businesses – wrote to all members of the House and Senate asking them to support or cosponsor the measure.

The bill would address “swipe” fees averaging over 2 percent of the transaction that banks and card networks like Visa and Mastercard charge merchants to process credit card transactions. Credit and debit card swipe fees have more than doubled over the past decade, soaring 25 percent last year alone to a record $137.8 billion. They are most merchants’ highest operating cost after labor and drove up consumer prices by about $900 a year for the average family last year.

Visa and Mastercard, which control more than 80 percent of the credit card market, centrally set the swipe fees charged by banks that issue cards under their brands and those banks do not compete with each other on price. Visa and Mastercard also restrict processing to their own networks, prohibiting competition from other networks that can offer lower fees and better security and resulting in the highest swipe fees in the industrialized world.

The legislation would require that credit cards issued by the nation’s largest banks be enabled to be processed over at least two unaffiliated networks – Visa or Mastercard plus a network such as NYCE, Star or Shazam. Domestic credit card networks like American Express or Discover could also be the second network, but not networks supported by foreign governments like China’s UnionPay. (UnionPay already sits on the governing boards of the Visa- and Mastercard-controlled EMVco standards-setting group and the Payment Card Industry Security Standards Council and, under current law, could be chosen by any bank to process Visa or Mastercard transactions.)

The banks would decide which two networks to enable on a card and then merchants would be allowed to choose which of the two to use when a transaction is made. That means networks would have to complete to offer the best pricing, security and service.

The bill would apply only to financial institutions with at least $100 billion in assets – about 30 of the nation’s largest banks and just one credit union but 90 percent of Visa and Mastercard credit card volume – and would have no impact on community banks or small credit unions.

About MPC
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.