WASHINGTON–While credit unions are lobbying Congress in opposition to the Credit Card Competition Act, retailers remain just as active in expressing their support, with more than 1,800 merchants from across the country calling on lawmakers to pass the bill.
The nearly 2,000 merchants are all signatories on a letter that was sent by the Merchants Payments Coalition (MPC) to Congress. The letter argues the bill will bring “long-sought competition to credit card swipe fees that drive up costs for consumers.”
In the letter sent by MPC to all members of the House and Senate, the merchants asked lawmakers to support the Credit Card Competition Act sponsored by Senators Richard Durbin (D-IL) and Roger Marshall (R-KS), Peter Welch (D-VT) and Lance Gooden (R-TX).
“This legislation … will bring much-needed competition into the United States credit card market, which has been dominated by only two players for far too long,” the letter said. “As members of the retail community and champions of the free market, we typically do not support government intervention except in cases where a market is not functioning. That is the case with the credit card marketplace in the United States.”
The letter was signed by 1,802 merchant companies, an increase of 134 over a similar letter sent to lawmakers in September, the MPC said, adding that a separate letter sent by 236 state and national trade associations representing merchants emphasized the impact of swipe fees on small businesses.
Providing ‘Relief’
“Passing this bill is one of the most important things Congress can do to provide relief for small businesses and consumers struggling amid near-record inflation in every state and congressional district,” the trade associations said. “While this legislation would benefit all merchants, it is small retailers who are calling for swipe fee reform more than any segment of our industry. Small retailers have the narrowest profit margins and fewest resources and are hit hardest by continuing unjustified increases in swipe fees.”
Both letters cited swipe fees averaging over 2% of the transaction that banks and card networks like Visa and Mastercard charge merchants to process credit card transactions.
‘More than Doubled’
“Credit and debit card swipe fees have more than doubled over the past decade, soaring 25% last year alone to a record $137.8 billion,” the organization said. “They are most merchants’ highest operating cost after labor and drove up consumer prices by about $900 a year for the average family last year.”
“That number is likely even higher today,” the company letter said, referring to the $900 figure. “Because credit card swipe fees are a percentage of the transaction, they are an inflation multiplier” as prices go up.
The letter further argues that Visa and Mastercard, which control more than 80% of the credit card market, centrally set the swipe fees charged by banks that issue cards under their brands rather than the banks competing to offer merchants the best deal.
‘Restrictions’ on Pricing
“They also restrict processing to their own networks, prohibiting competition from other networks that can offer lower fees and better security,” the retailers said.
As the letter adds, “They bar their competitors from even having a shot at business with banks that issue their cards. This blocking of competition drives up prices for merchants and consumers, harms security and strangles innovation.”
The Credit Card Competition Act would apply only to financial institutions with at least $100 billion in assets – about 30 of the nation’s largest banks and Navy Federal Credit Union – and “would have no impact on community banks or small credit unions,” the MPC said.
The credit union trade groups have strongly disagreed and argue the legislation will ultimately affect all credit unions.
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