A bill moving through Congress aims to treat credit cards in one way that debit cards are currently used.
Currently, swipe fees charged by major credit card companies cut into small business owners' profits. Those charges ultimately result in consumers paying more for goods and services. At 2 to 3 percent or more in the U.S., advocates for the proposed legislation say the swipe fees are too high.
If passed and signed into law, the bipartisan Credit Card Competition Act of 2022 would compel U.S. banks that distribute Visa (V) or Mastercard (MA) credit cards to use at least two unaffiliated networks with transactions. This has been required for debit card transactions since 2010.
Using a network on an open market allows businesses to choose a network with lower swipe fees.
The bill in the House of Representatives was introduced in September by Rep. Peter Welch (D-Vt.) and Rep. Lance Gooden (R-Texas). The Senate version was introduced in July by Sen. Richard Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.).
Raising Awareness at the World Cup
Timed during the 2022 World Cup in Qatar, one group is raising awareness about swipe fee concerns by releasing a video advertisement advocating for the change.
The Merchants Payment Coalition commercial conflates Visa's sponsorship of the World Cup as an athletic competition with its refusal to allow free market competition with networks that might charge less for swipe fees.
In the commercial, a soccer game is being played in a stadium. As goals are scored, images of credit cards and messages from a narrator appear.
"Free market competition -- Main Street businesses do it every day and consumers are the winners," a narrator says. "But what happens when we let credit card companies play by different rules? Americans pay the highest swipe fees in the world, up to 3% or more, nearly $1,000 a year in unfair hidden fees for families."
"That’s why Main Street businesses and consumers support the Credit Card Competition Act," the ad says. "It takes free market competition to have fair fees."
An Advocacy Organization Presses the Point
The National Association for Convenience Stores (NACS) is a sponsor of the ad and a spokesman representing it furthers the argument in a press release.
"Visa is spending untold millions of dollars to promote competition in soccer even though it refuses to allow competition over swipe fees and how transactions are routed," MPC Executive Committee member and NACS General Counsel Doug Kantor says. "Visa says it wants to 'give football fans from around the world the best way to pay' but it should start by allowing competition over the hidden fees that are charged every time soccer fans and other consumers use a credit card. If competition is good on the soccer field, it’s good on the swipe fee playing field as well."
"The legislation would require that credit cards issued by the nation’s largest banks be enabled to be processed over at least two unaffiliated networks -- Visa or Mastercard plus a network such as NYCE, Star or Shazam," the press release continues. "American Express or Discover could also be the second network, but not networks supported by foreign governments like China’s UnionPay. The banks would decide which two networks to enable on each card and merchants would each then decide which to use, requiring networks to complete over fees, security and service."
