Senate considers bill providing alternatives to Visa and Mastercard

The Senate Judiciary Committee is investigating Visa and Mastercard’s role in the credit card network industry and whether the two companies control too much of it.

Specifically, lawmakers are taking a look at credit card processing “swipe” fees that are paid by businesses but often passed on to consumers directly in the form of a surcharge, and indirectly in the form of higher prices.

Committee Chair Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.) have co-sponsored legislation requiring banks with more than $100 billion in assets to offer at least one other payment network option for their cards besides Visa and Mastercard. Durbin says the bill has support on both sides and the aisle.

“This is an odd grouping,” Durbin told the committee during a hearing. “The most conservative and the most liberal members happen to agree that we have to do something about this situation.”

Durbin said that Visa and Mastercard charged merchants more than $100 billion in credit card fees in 2023. At a growing number of small businesses, especially restaurants, customers are urged to pay with cash and are charged extra if they pay with a credit card.

Visa and Mastercard respond

But at the hearing, representatives from Visa and Mastercard pushed back. Bill Sheedy, senior advisor to Visa CEO Ryan McInerney, said Visa has offered incentives to businesses to adopt technology to add protections against fraud. Businesses that make the investment, he said, qualify for lower interchange fees.

“It’s very expensive to issue a product and to provide payment guarantee and online customer service, with zero liability,” Sheedy told the committee.

Mastercard President of Americas Linda Kirkpatrick said previous credit card regulations cost both businesses and consumers, pointing to the 2010 Durbin Amendment, requiring the Federal Reserve to limit fees on debit card transactions.

“Since debit regulation took hold, debit rewards were eliminated, fees went up, access to capital diminished, and competition was stifled,” she told the committee.

The National Retail Federation supports the passage of the Credit Card Competition Act, telling the committee in a letter that the current swipe fees have led to higher prices for consumers.