BURLINGTON, VT – Sen. Peter Welch (D-Vt.), co-sponsor of the bipartisan Credit Card Competition Act, released the following statement in reaction to Visa and Mastercard reaching an antitrust settlement with U.S. merchants on swipe fees, which would temporarily cap fees for the next years but not provide a long-term solution for small businesses and consumers:
“For U.S. merchants who have been hit with over $100 billion in swipe fees, this settlement is just a band-aid on a broken leg. This is a temporary fix when we need a long-term solution. I hear it from our small businesses all the time: the Visa-Mastercard duopoly puts extreme pressures on businesses in Vermont’s historic downtown shopping districts and up and down Main Streets across America, and they have no choice but to pay. We need choice, competition, and lower costs —we need the Credit Card Competition Act,” said Sen. Welch.
Swipe fees (also referred to as interchange fees) on Visa and Mastercard cards cost American merchants a total of $100.77 billion in 2023, over $7.5 billion more than the year prior and more than any other year in history. Visa and Mastercard run a duopoly on the market, enabling them to impose fees that are among the world’s highest – which are then passed on to the consumer in the price of the goods and services they buy.
Under the Credit Card Competition Act, the Federal Reserve would issue regulations to ensure that banks in four-party card systems that have assets of over $100 billion cannot restrict the number of networks on which an electronic credit transaction may be processed to less than two unaffiliated networks, at least one of which must be outside of the top two largest networks. This would inject real competition into the credit card market—opening the door for new market entrants such as current debit-only networks, encouraging innovation and enhanced security, creating backup options if a network crashes, and exerting competitive constraints on Visa and Mastercard’s fee rates. It is estimated the CCCAwill save merchants and consumers $15 billion each year.
Senator Welch is a co-sponsor of the bipartisan bill in the Senate, and previously led the legislation as a member of the House of Representatives.
Read more about the bill here.
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