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May 23, 2022 • Issue 22:05:02

Lawmakers eye fixes for

‘broken’ card system

weighted average that works out to about 0.5 percent for
credit cards and 8 cents for debit cards.
"The credit card system is broken," Doug Kantor, general
counsel at the National Association of Convenience Stores,
said in remarks to the panel. "We need competition in the
market. That's the bottom line."

Durbin, architect of the 2010 legislation that ushered in
debit interchange caps, agreed. And he made a thinly
veiled threat to regulate credit card interchange. "Let's
reduce inflationary pressure by preventing network swipe
fees from being jacked up to unreasonable levels," he said.

It was just one of six proposals Durbin said would "limit
Visa and Mastercard fee fixing." Additionally, he called for:
By Patti Murphy • Requiring issuers to detail on monthly cardholder
enator Richard Durbin is on a warpath over ris- statements the interchange assessed on each listed
ing interchange rates and Visa and Mastercard transaction;
rules he believes stymie competition. The Illinois • Eliminating interchange assessments on the tax por-
S Democrat called executives from Visa and tion of card payments;
Mastercard before the Senate Judiciary Committee, which
he chairs, on May 4, 2022, to protest recent interchange • Allowing merchants to choose which card network
increases. And he offered proposals to loosen the strong- processes each in-person and card-not-present
hold the two companies have on credit and debit card transaction;
networks.
• Reshaping the card security standards-setting ap-
"Interchange is designed to avoid competitive market paratus, currently run by Visa and Mastercard, by
pressures," Sen. Durbin remarked. "Banks get the fees, but requiring the inclusion of outside security experts.
banks do not set the fees. Instead, the banks let Visa and
Mastercard set the fees on their behalf. This means that all
banks in the network are guaranteed the same interchange
fees regardless of how efficient the bank is in running its Contributed articles inside by:
card operation, or in preventing fraud. It's a gravy train."
Natasa Cvijanovic .................................................................................28
Durbin then added that other countries have figured this Ken Musante .........................................................................................30
out. Regulators in Canada capped Visa and Mastercard
interchange at 1.5 percent; in the European Union, credit Sherrie Bryant ........................................................................................32
card interchange is capped at 0.3 percent and debit card TOC on page 3
interchange can't exceed 0.2 percent; Australia uses a

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