Thursday, April 28, 2022
No witnesses have been scheduled yet for the hearing, titled "Excessive Swipe Fees and Barriers to Competition in Credit and Debit Card Systems." However, retailers already have shown an eagerness to participate.
"Visa and Mastercard have been allowed to price-fix swipe fees and shut out competition in the payments market for too long," said Anna Ready Blom, director of government relations at the National Association of Convenience Stores, in an April 27 press release issued by the Merchant Payments Coalition. MPC, an alliance of retailing trade groups, is largely credited with coining the term "swipe fees" to describe interchange.
"With their actions contributing significantly to the inflation facing American families, it's time for an in-depth examination of their blatant anticompetitive practices," Blom added. "If we had a competitive payments market that guaranteed merchants and their customers were treated fairly, we wouldn't need this hearing, but the U.S. payments market is broken and this is an important step toward fixing it."
News of the upcoming Senate hearing follows an April 15 letter from a bipartisan group of lawmakers to the chiefs of Visa and Mastercard urging them to hold off on interchange rate hikes, which had been slated to take effect this month.
"As Americans are dealing with the highest rate of inflation in decades, your profits are already high enough and any further fee increase is simply taking advantage of vulnerable Americans," the letter stated. It was signed by Sen. Durbin, Senator Roger Marshall, R-Kan., Representative Beth Van Duyne, R-Texas, and Representative Peter Welch, D-Vt.
"If Visa and Mastercard operated in a market environment with real competition, we would not be troubled by your planned fee increases," the lawmakers wrote. "However, the current electronic payment system is a clear duopoly that your companies dominate, and you impose fees and rules that merchants, consumers and small banks have no real choice but to accept."
"Swipe fees are a percentage of the transaction, so banks and card networks are already receiving an unearned windfall as they piggyback on higher prices. They're going to see billions of dollars more in revenue this year even if rates stay the same, so an increase would only add insult to injury," Leon Buck, vice president at the National Retail Federation, said in responding to the lawmakers' letters.
Sen. Durbin has long been a critic of interchange. Back in 2010, he proposed several amendments to the Dodd-Frank Act that addressed interchange. Just one of those amendments made it into the final legislation: the one bearing his name and regulating debit interchange.
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