US lawmakers debate credit card market rules, fee impacts on customers

WASHINGTON — On Tuesday, lawmakers gathered in U.S. Congress to debate the rules regulating the credit card market and how they impact consumers.

Officials say the lack of competition in the credit card industry has had an effect on what are known as interchange fees and have a heavy financial toll for Americans.

They met at the Capitol to discuss new legislation aimed at creating more competition in the credit card industry to keep fees down.

Lawmakers said they estimate businesses paid more than $100 billion in so-called swipe fees on Visa-Mastercard cards in just 2023.

Testifying before Congress on Tuesday, Battenkill Books owner Chris Callahan said the fees were particularly painful for small business.

“Credit card swipe fees are a significant burden to all merchants but especially harmful to small businesses like mine that pay higher rates than our competitors because of the way Visa and Mastercard set the fees,” Callahan said. “While we’ve seen many costs go up for our business, credit card fees have been the toughest to handle.”

Now, there’s bipartisan legislation to enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly. The two companies control 83% of the credit cards in the United States.

“Capitalism without competition leads to unchecked greed, the exploitation of hardworking Americans and the erosion of opportunity,” Sen. Roger Marshall (R-Kan.) said at the hearing.

Similarly, Sen. Dick Durbin (D-Ill.) said an issue with how the fees work is that retailers, restaurants and other small businesses don’t have the ability to negotiate the fees.

However, representatives for the companies said that the proposed Credit Card Competition Act would actually hurt competition in the payment industry and make things more confusing for cardholders.

“It imposes artificial controls on a system that is working well. It will remove choice from consumers, erode security and hurt community institutions and credit unions, the very groups we’re trying to protect,” Linda Kirkpatrick, Mastercard, said.

Still, the Credit Card Competition Act is supported by many retail organizations and more than 200 state and regional business associations.