Dive Brief:

• A companion bill taking aim at the dominance of Visa and Mastercard was introduced in the House Monday by Reps. Peter Welch (D-VT) and Lance Gooden (R-TX), following the Senate’s version of such legislation that landed in July.
• The bill seeks to inject more competition into the credit card network industry by requiring a minimum number of networks through which to route credit transactions, with at least one being a network other than Visa or Mastercard, according to the Monday news release. That could include smaller rivals such as NYCE or Shazam, or other big credit card companies such as American Express or Discover Financial Services.
• Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) in July introduced Senate legislation that seeks to rein in the card giants’ control of the market by giving merchants access to more card networks’ payment rails.

Dive Insight:

Like its Senate companion, the House bill seeks more card network competition as merchants fight for lower interchange — or “swipe” — fees. Those fees, typically around 2%, are what merchants pay to route transactions through the card giants’ networks.

A Visa spokesperson declined to comment on the House bill. A Mastercard spokesperson deferred to the Electronic Payments Coalition (EPC). That trade group urged legislators to reject “harmful credit card routing mandates,” according to a spokesperson.

“This legislation would again boost retailers’ bottom lines at the expense of American consumers — stripping them of their credit card rewards and usurping their choice of network while leading to a less secure, less innovative, and weaker financial system,” said Electronic Payments Coalition Chairman Jeff Tassey in a statement.

Welch is one of the four lawmakers who sent a letter to Visa and Mastercard in April, urging those card networks to cancel planned credit and debit swipe fee increases. 

“In a well-functioning market there is competition and choice,” Welch said in Monday’s press release. “That does not exist in our current credit card network market. This bipartisan bill will correct that and bring much needed competition to the Visa-Mastercard duopoly. This long-overdue bill will help our small businesses thrive and lower household costs for families at a time when they really need it.”

The Merchants Payments Coalition (MPC) noted credit and debit card swipe fees reached a record $137.8 billion last year. For most merchants, those fees are the highest operating cost after labor. They’re also passed on to consumers, the MPC contended, driving up consumer prices by about $900 a year for the average family in 2021.

As swipe fees have climbed, the issue has pitted merchants against credit card networks and card-issuing banks. Retail giants Walmart and Target, along with some 1,600 other merchants, recently called on members of Congress to pass the legislation. 

“U.S. swipe fees are the highest in the industrialized world and the card industry wants to keep them hidden so American families don’t know how much they’re paying,” said MPC Executive Committee member Doug Kantor in a news release. “This legislation would make card networks compete and give them incentives to improve service and security while keeping costs in check.”

Those on the other side also point to security, with the EPC saying the legislation would make transactions less secure and higher-risk for consumers. “When government comes in and puts hands on one side of the customer scale, like they did in the Durbin amendment [for debit networks], you have all kinds of unintended consequences,” Tassey said during a Tuesday interview.

When Mastercard Chief Financial Officer Sachin Mehra was asked about the Senate legislation last week during a virtual conference appearance, he said there “are a lot of unknowns,” including whether such a mandate is equitable.

“Is this equitable for consumers?” Mehra said, while speaking Sept. 15 during the Autonomous Future of Commerce Symposium. “And is this equitable for companies such as Mastercard, who have invested heavily in building out our safety and security capabilities and our acceptance capabilities, all of which are now being asked to be opened up, as part of what’s being proposed here?” 

For its part, Mastercard will spend its time and energy educating stakeholders “on how we believe this will adversely impact the consumers and what the consequences of that will be,” Mehra said.