Durbin Statement Rejecting Proposed Settlement Between Visa, Mastercard & Merchants
CHICAGO – U.S. Senate Democratic Whip Dick Durbin (D-IL), Ranking Member of the Senate Judiciary Committee and lead sponsor of the Credit Card Competition Act, released the following statement on a recent proposed settlement between Visa and Mastercard and the merchants. The settlement comes after two decades of class-action litigation over swipe fees that merchants pay to Visa, Mastercard, and the banks.
“As Americans are trying to make ends meet, the biggest Wall Street banks, Visa, and Mastercard are lining their pockets by charging outrageous swipe fees on each credit card transaction. Reducing the cost of swipe fees and allowing merchants more choice in which cards they accept should be welcome news, however, I believe this settlement falls short. This deal provides only temporary concessions and the ability for Visa and Mastercard to change the rules as they go.
“A true solution to ever increasing swipe fees is to pass my bipartisan, bicameral legislation—the Credit Card Competition Act—to enhance competition between credit card networks and ultimately lower costs for small businesses and consumers. My bill would help reduce the swipe fees that are crushing small businesses and costing American families an extra $1,200 each year. That’s the kind of help American consumers and Main Street merchants need.”
Building off debit card competition reforms enacted by Congress in 2010, Durbin and U.S. Senator Roger Marshall’s, M.D. (R-KS) Credit Card Competition Act 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. The legislation is estimated to save merchants and consumers $17 billion each year.
Visa and Mastercard wield enormous market power in credit cards, accounting for more than 726 million cards or about 84 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 $101 billion in U.S. merchant credit card fees in 2023. 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 these fees in the price of the goods and services they buy.
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