WASHINGTON – A bipartisan group of senators grilled Visa and Mastercard executives in a Judiciary Committee hearing Tuesday, revitalizing Washington’s efforts to inject competition into the credit card industry.
Retailers pay a fee when consumers make a purchase with a credit card, which is usually about 2% of the purchase, according to the National Retail Foundation. Congress has long been critical of these swipe fees; in 2010, it passed the Durbin Amendment, which capped similar charges for debit card transactions.
Tuesday’s hearing was the first major Congressional action directed at swipe fees since senators — including committee chair Dick Durbin (D-Ill.) and Vice President-elect JD Vance (R-Ohio) — introduced the bipartisan Credit Card Competition Act last year. The CCCA would direct the Federal Reserve to require large banks to provide retailers with options for credit card processing, lowering operating costs for businesses.
During the hearing, senators on both sides of the political aisle were critical of Visa and Mastercard, which together account for about 70% of credit cards, according to Motley Fool Money.
“You are killing small business in the United States of America,” Sen. Peter Welch (D-Vt.) told representatives from both companies.
Proponents of the CCCA argue that Visa and Mastercard dominate the industry and impose high swipe fees that obstruct business and hike prices for consumers. CMSPI, a payment consultant group, estimates that the proposed legislation could save retailers and consumers $16.4 million annually.
Even some fiscally conservative senators have thrown their support behind the CCCA.
“I’m a hands-off, free market capitalist,” said Sen. Roger Marshall (R-Kan.), an original co-sponsor of the CCCA. “But capitalism without competition leads to unchecked greed, the exploitation of hard-working Americans and the erosion of opportunity.”
Linda Kirkpatrick, president of the Americas at Mastercard, touted a common defense of the swipe fees: credit card rewards programs. She said that many Mastercard rewards programs were drastically reduced or cut when Europe capped swipe fees at 0.3%.
Alternatively, Professor Roger Alford of the University of Notre Dame Law School cited a Federal Reserve study, which found that credit card rewards programs redistribute wealth to benefit richer, low-minority areas.
“Increasing rewards programs do not have the same broad distributional benefits as reducing the cost of goods and services,” Alford said. “If pass-through happens on both sides, then the trade-off of reducing the price of groceries for every American may be worth fewer benefits to premium card holders at the airport lounge.”
Kirkpatrick and Bill Sheedy, a senior advisor to the CEO of Visa, also argued that their companies made payment more convenient for small businesses and invested in security technology to protect consumers and retailers.
In response, Welch argued that security did not justify “rip-off prices.” He also pressed Kirkpatrick and Sheedy on why large companies like Walmart were able to negotiate deals on swipe fees, while small business owners had no choice but to accept their rates.
The CCCA has stalled in committees in both chambers of Congress since it was introduced in 2023. Sen. Thom Tillis (R-N.C.), who said he does not support the CCCA, acknowledged that the bill would not pass in the current Congress.
However, he said Congress is in tune to the problems facing small businesses and consumers. He added that if the industry does not address their concerns, Congress will likely pass the bill within the next three years.
“Get in a room and solve it because I’ll guarantee the solution coming from Congress will not be good for anyone,” Tillis said.
