Politics is as polarized as ever in Washington, but a bill related to the processing of credit card payments has managed to gather bipartisan momentum in Congress.
It’s a testament to the bill’s potential impact that it’s attracted attention from powerful lawmakers this month even as Congress struggled to reach a consensus on a stop-gap budget measure that narrowly averted a Sunday federal government shutdown.
The Credit Card Competition Act proposal, aimed at boosting competition for card network giants Visa and Mastercard, has drawn support not just from Democratic Majority Whip Dick Durbin, a long-time critic of the two networks, but also Sen. Roger Marshall, a Republican who threatened to withhold his support for the National Defense Authorization Act if the CCCA didn’t get a vote.
The bill would require bank card issuers to ensure that there is at least one network available for processing credit card payments that isn’t Visa or Mastercard. The bill’s sponsors hope the change would prompt more network competition, and as a result, lower fees for merchants to process credit card transactions.
The Democrat from Illinois and the Republican from Kansas are the kind of congressional duo that is in short supply these days. For his part, Durbin rails against a Visa-Mastercard “duopoly” concentrating market power, while Marshall bemoans U.S. merchants paying much higher processing fees than their European counterparts.
“Bipartisanship is extraordinarily rare,” said Lloyd Constantine, an attorney whose law firm, Constantine Cannon, has made a name for itself fighting credit card networks. “You couldn’t get a bipartisan view that motherhood is good. I’m sure bipartisan support [for that bill] is of great concern to Visa and Mastercard.”
Earlier this month, Durbin and Marshall convened a press conference to tout the bill on the Capitol lawn, parading out small business leaders to back the bill. But big corporate interests are driving the battle, with major retail, restaurant and other merchant groups propelling it, and big banks and their payments partners protesting it.
The National Retail Federation and National Restaurant Association support the bill while the Bank Policy Institute and Electronic Payments Coalition oppose it.
Congressmembers standing on the sidelines of the CCCA warfare have been reluctant to pick a side if they don't have to, say interested parties involved in arm-twisting on Capitol Hill. They know it’s a clash of titans that could cause collateral damage.
“Big banks and big merchants make for a fair fight,” said The Nilson Report Publisher David Robertson, who said he might otherwise be opposed to the government putting its finger on the scale. Robertson’s research firm has been keeping tabs on the industry for five decades, so it’s not the first time he’s seen this kind of tension.
Big bank card issuers and the payments processing players they work with have been fending off threats to their lucrative U.S. card franchise for years. By contrast, retailers and restaurants have been angling to lower their costs for years too. For both, billions of dollars are at stake.
If Durbin and Marshall are able to overcome the acrimony of their own legislative arena and get the bill passed, it’s likely a sign it was overdue.
