Lenise Willis//Editor in Chief//September 21, 2023
3 Senators, Business Owners Urge Passage of Credit Card Competition Act
Senators from Illinois, Kansas and Vermont were joined at a press conference Wed., Sept. 20, by the Merchants Payments Coalition and small business owners from across the country who endorse their bill.
Lenise Willis//Editor in Chief//September 21, 2023
U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, and U.S. Senators Roger Marshall, M.D. (R-KS) and Peter Welch (D-VT), along with the Merchants Payments Coalition and small business owners from across the country, held a press conference calling on Congress to pass their Credit Card Competition Act, bipartisan legislation that would enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly.
“American consumers today are concerned about inflation and the high prices of groceries and gas,” Durbin said. “What they may not know is that the fees charged by Visa and Mastercard when they use their credit card, known as swipe fees, are adding to this problem. Merchants have no choice but to accept the outrageous fees if they want to accept credit cards used by their customers. Our bipartisan legislation, which has the support from a wide range of small business owners, would inject real competition in the credit card market. It is long overdue for Congress to break up the sweetheart deal that Visa, Mastercard, and the big banks enjoy. We must bring the bipartisan Credit Card Competition Act to the floor for a vote.”
“Family’s budgets are being stretched to the absolute limit with little room for error while Wall Street and the Visa-Mastercard duopoly line their pockets,” Marshall added. “But apparently, Visa-Mastercard’s 50 percent profit margin is not enough. They are plotting their next payday, announcing they are hiking up their credit card swipe fees on merchants and consumers again this fall. I won’t stand for these massive, wealthy corporations price-gouging small businesses at every turn. Visa and Mastercard’s duopolistic, heavy-handed market practices have disproportionately hurt American families and small businesses for far too long. The credit card market is broken, and we have a solution to fix it.”
Welch added: “So many of us here in Washington celebrate the American dream of owning a small business, but the truth is it’s far too difficult to make that dream a reality. The brutal exchange fees imposed by credit cards are absolutely abusing Vermont’s merchants. It’s hard enough to be a small business today, especially as they compete against online retailers and big box stores—now, the growing swipe fees on every transaction are making it harder. The Visa-Mastercard duopoly’s plan to raise interchange fees is just the latest reason to pass the bipartisan Credit Card Competition Act, so we can make it easier for our small businesses to thrive.”
“Thank you to Senators Durbin, Marshall, Welch and Vance for their tireless advocacy on behalf of Main Street businesses. We need Congress to follow the lead of these champions of Main Street. With Visa and Mastercard hiking fees and creating new ones just next month, it’s time to pass the Credit Card Competition Act,” said Doug Kantor, Merchants Payments Coalition Executive Committee member and National Association of Convenience Stores General Counsel.
Joining the press conference were several business owners who gave a more personal description of the problem that needs to be addressed. Jared Scheeler, CEO of the Hub Convenience Stores Inc. in Dickinson, N.D. expressed the need for the Credit Card Competition Act.
“Visa and Mastercard make sure that small businesses like mine get hit with the highest credit card swipe fees,” Scheeler said. “They should not be able to get away with centrally fixing those fees, but they do. We need the Credit Card Competition Act to finally bring some market forces to bear for small businesses. Without it, the situation will just keep getting worse.”
Doug Yawberry, president of Weigels Inc. convenience stores in Powell, Tenn., added: “Credit card swipe fees are not the result of a competitive market and our fees increased more than 28 percent last year alone. This problem will never fix itself. We need Congress to act to protect Main Street from these unfair fees.”
“Local grocers need help. The bipartisan Credit Card Competition Act does that,” said Jimmy Holland, Associated Wholesale Grocers in Kansas City, Kan. “There is no heavy-handed government price controls. This is a commonsense solution that requires the smallest of competition in credit card market. The grocery industry is heavily competitive. We compete every day on prices and products. Competition works and it is desperately needed in the credit card market.”
“As a small business owner, I feel the burden of these fees especially hard,” said Patti Riordan, owner of the Smoke Stack Hobby Shop in Lancaster, Ohio. “That’s because small businesses pay the highest swipe fee rates, have the fewest resources to navigate complex credit card contracts and have no leverage whatsoever to negotiate. The answer is competition, and that’s why I support Credit Card Competition Act.”
Danny Reynolds, owner of Stephenson’s of Elkhart, a clothing store in Elkhart, Ind., also spoke out about how increasing swipe fees has affected his business. “In my 28 years in the retail business, credit card companies and the banks continuously raise what I pay in swipe fees,” he said. “For my store, the amount we pay each year has grown to the equivalent of a starting employee’s salary. I would love to hire more employees but these skyrocketing fees on top of challenging economic conditions are making it impossible to create jobs for my community. It’s time to stand up for Main Street over Wall Street and pass the Credit Card Competition Act.”
Last week, the Senators sent a letter to Visa and Mastercard insisting on an immediate reversal of their recent plans to increase credit card swipe fees on merchants and consumers again this fall—a move that would cost American businesses and merchants an additional $502 million annually. In the letter, the Senators renewed their calls for competition in the payment processing industry and slammed Visa and Mastercard for their price-gouging tactics at the expense of hard-working Americans.
Along with Durbin, Marshall and Welch, U.S Senator J.D. Vance (R-OH) also co-introduced the bipartisan bill. Building off of debit card competition reforms enacted by Congress in 2010, the bill would direct the Federal Reserve to ensure that the largest credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed.
Visa and Mastercard wield enormous market power in credit cards; according to the Federal Reserve, they account for nearly 576 million cards, or about 83 percent of general-purpose credit cards. Visa’s and Mastercard’s market power and network structure have enabled them to impose fees on U.S. merchants that are among the world’s highest, charging a total of $93 billion in U.S. merchant credit card fees in 2022. These fees include interchange or swipe fees which Visa and Mastercard require merchants to pay to issuing banks, as well as network fees that Visa and Mastercard require merchants to pay directly to them. Consumers ultimately pay for all of these fees in the price of the goods and services they buy. Interchange fees are the second largest cost for many small businesses—only behind labor costs.
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