New Ad Warns Credit Card Competition Act is Needed to Block China UnionPay from U.S. Credit Cards

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

WASHINGTON, April 23, 2024 – A new television commercial being aired by the Merchants Payments Coalition warns that there is no bar to China’s payment network processing Americans’ credit card data unless Congress passes the Credit Card Competition Act.

“A glaring gap in payments security currently gives U.S. banks the option to outsource credit card processing to China through the China UnionPay network if they choose to do so,” MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones said. “The CCCA would close that loophole and protect American consumers.”

The 30-second ad and similar digital banner ads are running in Washington and targeted markets around the country. The campaign follows a letter MPC sent to Congress last fall warning that Visa and Mastercard “have put our payments at risk” through increasingly close ties with China.

China’s involvement in the U.S. payments system dates to 2010, when Mastercard and China UnionPay signed an agreement to “explore business opportunities.” Visa and Mastercard brought China UnionPay, a card network controlled by the Chinese government, into the governing body of EMVco in 2013 and the Payment Card Industry Security Standards Council in 2017. The two groups, which are controlled by Visa and Mastercard, set security rules for the U.S. credit card system and a Visa executive said his company was “delighted” to have UnionPay as a member while a Mastercard executive welcomed China UnionPay to the “family.”

Currently, there is no law that prevents Visa, Mastercard or any of the banks that issue credit cards under their brands from working with China UnionPay. But the CCCA would take the first step by prohibiting China UnionPay or any other foreign state owned or sponsored payment network from being used on U.S. credit cards. The prohibition would keep banks from exposing Americans’ sensitive financial data to foreign governments by routing U.S. credit card transactions over foreign networks.

“This is a consumer protection alert – your personal financial data is at risk,” an announcer says in the commercial as a warning buzzer sounds and a Chinese government official reviews troops from a moving car. “Visa and Mastercard are working with China to rewrite security standards for your financial data. If we do nothing, a company controlled by the Chinese Community Party could soon be processing your payments and accessing your data.”

“It has to be stopped,” the announcer says as a Chinese flag waves and computers flash “Breach Detected” onscreen. “The Credit Card Competition Act would block China's access to American credit cards. Tell Congress to protect your data now.”

The CCCA is aimed at credit card swipe fees, which have more than doubled over the past decade. Credit and debit card swipe fees together reached a record $172.05 billion last year and are most merchant’s highest operating cost after labor, driving up prices by more than $1,000 a year for the average family.

The fees are out of control because of lack of competition: Visa and Mastercard, which control over 80 percent of the market, each centrally set the swipe fee rates charged by all banks that issue credit cards under their brands. They also block transactions from being processed over competing networks that offer lower fees and better security.

The CCCA would ensure that cards from the nation’s largest banks be able to be routed over at least one competing network like NYCE, Star or Shazam in addition to Visa or Mastercard’s networks. Banks would choose which networks to enable but merchants would then choose which to use, resulting in competition over fees, security and service expected to save merchants and their customers
over $15 billion a year.

In addition to keeping China from expanding further into U.S. payments, the bill would reduce fraud because the Federal Reserve says the competing networks have
one-eighth the fraud rate of Visa and Mastercard’s networks. Credit card rewards would not be affected and financial institutions with less than $100 billion in assets – including all community banks and all but one credit union – would be exempt.

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. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.