Earlier this year, Sen. Roger Marshall (R-Kansas) and Sen. Richard Durbin (D-Illinois) introduced the bipartisan Credit Card Competition Act.
Here’s how Dr. Marshall describes it:
The Credit Card Competition Act of 2022 would enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly. Building off of debit card competition reforms enacted by Congress in 2010, the bill would direct the Federal Reserve to ensure that giant credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed, with certain exceptions.
Marshall penned an op ed for the Kansas City Star and the Wichita Eagle back in August, in which he explained that every time we swipe a credit card at a store results in a fee, “... an ever-increasing fee, invisible to most, but increasingly crushing our merchants and rising costs for consumers across the board. Just like a sales tax, Wall Street banks levy a 2-4% fee on every purchase you make with your credit card, and the retailer has to absorb or pass on this cost to consumers. ... I’m fighting for more competition ... I hope you will support local retailers and local community banks, which keep money in our home communities rather than sending it to Wall Street.”
The Merchants Payments Coalition reports that swipe fees drove up prices for the average family by $900 last year.
They are one of some businesses’ highest expenses, after payroll.
The ever-increasing fees are unfettered by competition. Together, Mastercard and Visa control nearly 80% of the market. The goal is to force more competition. For each credit card, banks would be required to give stores a choice. Independent credit networks like NYCE, Star, Shazam, or even Discover or American Express, could be in the game.
Swipe fees cost merchants more than $105 billion last year, a one-year increase of 25%, according to the Nilson Report, so there should be room for competition. And while opponents claim consumers won’t benefit from this reform, even if it does save retailers money, merchants have shared 70 percent of the savings from the previous, similar law related to debit card transactions. At the very least, if the fees stop going up, they won’t have to pass on more increases to consumers.
Give our Sen. Marshall credit for a good piece of legislation.