Banking trade groups say the recently reintroduced bill changing credit card “swipe fee” rules will harm community banks and consumers.
The Credit Card Competition Act was reintroduced June 7 by Sens. Dick Durbin (D-Ill.) and Roger Marshall R-Kan.). The bill requires banks with more than $100 billion in assets to offer merchants at least two networks to process credit cards, one of which cannot be owned by Visa or Mastercard. Banks could decide which networks to enable, but merchants would still choose which to use on individual transactions. Community banks would be exempt from the requirement.
Both the Independent Community Bankers of America and American Bankers Association see the bill as detrimental to banks and consumers. To the groups, the proposal is an expansion of profits the largest retailers gleaned from the landmark 2010 Durbin Amendment, which limited fees charged to retailers for processing debit card transactions.
According to the ICBA, the legislation would reduce access to credit, weaken cybersecurity protections and eliminate funding for credit card rewards programs.
“The measure would require all banks — including Main Street community banks — to subsidize the costly and burdensome changes it would impose on the payments system,” said ICBA President and CEO Rebeca Romero Rainey. “This refutes the sponsors’ claims that their plan would help community banks and risks driving small issuers to exit the credit card business altogether.”
Merchant lobbying groups support the bill, arguing it would reduce interchange fees by breaking the hold Visa and Mastercard have on the credit card network market. The two companies account for more than 80 percent of the market. According to Washington, D.C.-based Merchants Payments Coalition, the ensuing competition between network providers for fees, security and service will save merchants and customers an estimated $11 billion annually.
Durbin and Marshall originally introduced the Credit Card Competition Act last July, but it didn’t receive a vote in 2022. The bill has additional cosponsors in the Senate and House this year, including Sens. Peter Welch (D-Vt.) and J.D. Vance (R-Ohio.) and Reps. Lance Gooden (R-Texas), Zoe Lofgren (D-Calif.), Jeff Van Drew (R-N.J.) and Tom Tiffany (R-Wis.).