WASHINGTON–At the same time credit unions are renewing their efforts to stop interchange legislation in Congress now that it has also been introduced in the House, the nation’s retailers say the move shows the bill is “gaining momentum.”
The National Retail Federation, which strongly supports the introduction of the Credit Card Competition Act, is praising the House and the bill’s sponsors, Rep. Peter Welch (D-VT) and Rep. Lance Gooden (R-TX).
The bill would require that credit cards issued by the nation’s largest banks be able to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competing card network or one of several independent networks like Star, NYCE or Shazam. Merchants would then be allowed to choose which of the two networks to use, prompting networks to compete over fees, security and service.
The measure would apply only to banks with $100 billion or more in assets and according to its proponents have no effect on local community banks or credit unions (only Navy FCU has assets of more than $100 billion).
Credit unions have been aggressively pushing back against the retailers’ claims, including saying the asset cap is meaningless and that all CUs will be affected.
‘Skyrocketing Fees’
“Lawmakers from both sides of the aisle and both chambers of Congress are alarmed by how much skyrocketing swipe fees are driving up prices for consumers and recognize the need for competition,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said. “Making networks compete over who gets to process transactions will make a huge difference in bringing these fees under control and will strengthen the security and reliability of the credit card system at the same time.
“Representative Welch is a long-time champion of swipe fee transparency and competition, and Representative Gooden is an influential member of the House Financial Services Committee in a pivotal position to help this measure become law,” Buck continued. “Working together with senators (Richard) Durbin and (Roger) Marshall, they can see to it that big banks and global card networks finally have to compete the same as small businesses do every day.”
Welch said the bill will “bring much needed competition to the Visa-Mastercard duopoly,” while Gooden said it will ensure that major credit card companies “can no longer use their monopolistic power to crush their competition.”
‘Billions’ Can be Saved
The retailers repeated their ongoing statements that Visa and Mastercard – which control 80% of the U.S. credit card market – “currently restrict competition by allowing transactions made on cards issued under their brands to be processed only over their own networks.”
The NRF said competition over the processing of credit card transactions could save retailers and their customers at least $11 billion a year, according to payments consulting firm CMSPI.
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