Senate Majority Leader Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.) called on Visa and Mastercard on Wednesday to cancel their plans to increase credit card fees, saying the move would hurt small businesses and would harm consumers.
Swipe fees — or the fees that credit card companies charge retailers for credit card transactions — cost U.S. merchants an estimated $93 billion last year and are often passed on to consumers, the senators noted in a joint statement.
“With small businesses and families already struggling with high grocery and gas prices, this hidden increase in credit card fees couldn’t come at a worse time,” Durbin and Marshall said.
As The Wall Street Journal reported Wednesday, Visa and Mastercard will increase their swipe fees in October and April, potentially costing retailers an additional $502 million per year.
Durbin and Marshall, who reintroduced legislation against swipe fees last month, said news of the fee increases “reinforces that it is time to pass our bipartisan, bicameral legislation” that they say increases competition and would reduce costs for businesses and consumers.
The Credit Card Competition Act would require financial institutions with more than $100 billion in assets to allow at least two network options for processing credit card transactions, one of which is neither Visa nor Mastercard. The two companies control 80 percent of the credit card network market in America.
“We must ensure real competition in the credit card industry,” Durbin and Marshall said in their statement Wednesday. “Our bill ensures that the Visa-Mastercard duopoly ends its price gouging that disproportionately hurts American families and small businesses.”
However, the Electronic Payments Coalition – which includes Visa, Mastercard and other banking giants – has argued that such legislation would benefit “large retailers” and eliminate funding for popular credit card “points” programs.
“Major retailers, led by Walmart and Target, and their allies in Congress continue to distort the truth about exchanges,” Richard Hunt, chief executive of the Electronic Payments Coalition, said in a statement Thursday.
Hunt noted that swipe fees have remained largely stable in recent years while retail sales have increased. He also pointed to the failure of major retailers to pass on savings from previous legislation that imposed similar fees on debit card transactions.
“Lawmakers should not fall for dealers’ broken promises,” Hunt added.
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