Visa and Mastercard have come under fire from Senate Majority Whip Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.), who are urging the credit card companies to cancel their plans to increase swipe fees. The senators argue that this move will negatively impact small businesses and consumers. Swipe fees, or the fees charged by credit card companies to retailers for credit card transactions, reportedly cost U.S. merchants $93 billion last year and are often passed on to consumers.
Durbin and Marshall emphasize that this credit card fee increase is especially untimely given that small businesses and families are already struggling with high prices on groceries and gasoline. Visa and Mastercard are set to implement their fee increases in October and April, potentially costing retailers an additional $502 million each year, according to the Wall Street Journal.
In response to this news, Durbin and Marshall have reintroduced legislation targeting swipe fees. They believe that passing their bipartisan, bicameral legislation will increase competition and lower costs for businesses and consumers. The Credit Card Competition Act, if enacted, would require financial institutions with over $100 billion in assets to offer at least two network options for processing credit card transactions, with one of them not being Visa or Mastercard. Currently, these two companies hold 80% of the credit card network market in America.
Durbin and Marshall state that it is crucial to introduce real competition in the credit card industry. Their bill aims to put an end to the price gouging tactics of Visa and Mastercard, which disproportionately harm American families and small businesses.
However, the Electronic Payments Coalition, comprised of Visa, Mastercard, and other banking giants, opposes this legislation. They argue that it would primarily benefit big-box retailers and eliminate funding for popular credit card “points” programs.
Richard Hunt, the executive chairman of the Electronic Payments Coalition, claims that swipe fees have remained stable in recent years despite an increase in retail sales. He also points out that large-scale retailers have failed to pass on the savings from previous legislation targeting similar fees on debit card transactions. Hunt cautions lawmakers not to fall for the promises made by merchants.
In conclusion, Visa and Mastercard’s plans to raise credit card swipe fees have triggered opposition from lawmakers who are concerned about the impact on small businesses and consumers. Advocates for the fee increase argue that it will benefit big-box retailers, while critics argue that it perpetuates a lack of competition and harms American families and small businesses. The debate surrounding swipe fees continues as lawmakers weigh the potential consequences and benefits of legislation targeting these fees.
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