WASHINGTON--The Merchants Payments Coalition has released a new estimate it said shows that passage of the Credit Card Competition Act would save merchants and their customers at least $15 billion a year.
The legislation, which credit unions and financial institutions strongly oppose, was recently re-introduced in both the House and Senate.
The MPC noted that payments consulting firm CMSPI in 2022 estimated that the Credit Card Competition Act would save merchants and consumers at least $11 billion a year, based on pre-pandemic 2019 credit card spending. With a new bill before Congress, CMSPI revised its estimate based on the latest figures and now says the savings would “conservatively” amount to $15 billion, according to the MPC.
The MPC released a statement from CMSPI that reads, ““Increased competition for credit card network routing would result in significant pro-competitive efficiencies for U.S. payment services, which have some of the least competitive rates across the globe.”
What Legislation Would Do
As CUToday.info has reported, with a few exceptions, the new legislation is similar to that which failed to pass the prior Congress and would require that cards from financial institutions with $100 billion or more in assets be enabled to be processed over at least two unaffiliated networks – Visa or Mastercard plus a competitor like NYCE, Star or Shazam, or even American Express or Discover.
The financial institution would decide which networks to enable, but merchants would then choose which to use on individual transactions, meaning networks would have to compete over fees, security and service, according to proponents of the bill.
The MPC has argued credit and debit card swipe fees have doubled over the past decade, soaring by $22 billion in 2022 alone to a record $160.7 billion, and are most merchants’ highest operating cost after labor, “driving up consumer prices by an estimated $1,024 a year for the average family,” according to the merchants’ group.
‘Out-of-Control Fees’
“As swipe fees go up each year, the amount that would be saved by bringing competition to these out-of-control fees goes up with it,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “We have the highest swipe fees in the industrialized world and the amount of relief that could be provided to small businesses and consumers struggling to cope with still-high inflation is enormous. All Congress has to do is tell the card networks and megabanks ‘enough is enough.’ ”
The Credit Card Competition Act has been introduced by Sens. Richard Durbin (D-IL), Roger Marshall (R-KS), Peter Welch (D-VT) and J.D. Vance (R-OH), and by Reps. Lance Gooden (R-TX), Zoe Lofgren (D-CA), Thomas Tiffany (R-WI) and Jefferson Van Drew (R-NJ).
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