U.S. Senate Democratic Whip Dick Durbin (D-IL), who sponsored the Credit Card Competition Act with Sen. Roger Marshall (R-KS), came out against the proposed Visa (V) and Mastercard settlement on Monday, saying the pact doesn’t provide enough protections for retailers and consumers.
The settlement, announced last week, agrees to reduce the U.S. combined average effective credit interchange by 0.1 percentage point for five years. In addition, it gives merchants more control over which kinds of credit cards to accept.
“I believe this settlement falls short,” he said in a statement. “This deal provides only temporary concessions and the ability for Visa and Mastercard to change the rules as they go.”
Instead, Durbin called on both chambers of Congress to pass the legislation that he has proposed, which is designed to “enhance competition between credit card networks and ultimately lower costs for small businesses and consumers.”
The bill would lower swipe fees, which he said cost American families an extra $1,200 each year. It would also ensure that the largest credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processes.
Durbin estimates the bill would save merchants and consumers $17B each year.
“Visa (V) and Mastercard (MA) wield enormous market power in credit cards, accounting for more than 726M cards or about 84 percent of general-purpose credit cards,” Durbin said. “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 $101B in U.S. merchant credit card fees in 2023.”
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