large retailers such as
<span class=" quote-pick" data-track-hover="QuotePeek" data-significance="PASSING-MENTION" data-ticker="M" data-charting-symbol="STOCK/US/XNYS/M"> Messi's <span class="company-name-type">,</span></span> <span class="company-name quote-pick" data-track-hover="QuotePeek" data-significance="PASSING-MENTION" data-ticker="HD" data-charting-symbol="STOCK/US/XNYS/HD"> the home Depot </span>
<span class="company-name quote-pick" data-track-hover="QuotePeek" data-significance="PASSING-MENTION" data-ticker="WMT" data-charting-symbol="STOCK/US/XNYS/WMT"> walmart </span>
have come in favor of a proposed bill that aims to break that bar
<span class="company-name quote-pick" data-track-hover="QuotePeek" data-significance="PASSING-MENTION" data-ticker="V" data-charting-symbol="STOCK/US/XNYS/V"> Visa </span>
<span class="company-name quote-pick" data-track-hover="QuotePeek" data-significance="PASSING-MENTION" data-ticker="MA" data-charting-symbol="STOCK/US/XNYS/MA"> master card </span>
There is a credit card swipe fee. But whether it gets passed is not clear.
This week, 1,668 retailers and more than 200 trade organizations urged Congress to pass the Credit Card Competition Act, which gives merchants the option to route credit card transactions to other networks.
<span class="company-name quote-pick" data-track-hover="QuotePeek" data-significance="PROMINENT" data-ticker="V" data-charting-symbol="STOCK/US/XNYS/V"> Visa </span>
<span class=" quote-pick" data-track-hover="QuotePeek" data-significance="PROMINENT" data-ticker="MA" data-charting-symbol="STOCK/US/XNYS/MA"> master card <span class="company-name-type">,</span></span>
According to the letter dated 13 September.
The Wall Street Journal reported that the bill aims to increase competition, while cutting fees paid by merchants when they accept credit cards.
The Merchant Payments Coalition, which represents merchant trade groups, said, “The Credit Card Competition Act will bring much-needed relief to retailers and U.S. consumers, simply by requiring that Visa and MasterCard be other networks for both merchant and bank business.” compete with.” Letter. (The MPC also sent a second, similar letter to Congress, which was signed Wednesday by trade unions.)
(ticker: V) and
(MA) were largely unaffected by the proposed legislation. Visa closed down 13 cents at $199.41 on Wednesday, while MasterCard gained 41 cents to $325.85.
Credit card transactions are currently processed by the four major payment networks: Visa, MasterCard,
search for financial services
(DFS). But Visa and MasterCard control more than 80% of the US credit card market and do not face competition from other service providers for merchant business, the trade group said in the letter.
This raises prices for US merchants and consumers, who paid about $138 billion in credit and debit card fees in 2021, said the MPC, which conducted letters to Congress.
The Credit Card Competition Act 2022, introduced in July by Sen. Richard Durbin (D., Ill.) and Sen. Roger Marshall (R., Kan.), aims to change this scenario. The bill requires that there be at least two unconnected networks available for credit card processing. This can be Visa or Mastercard and other networks like NYCE, which is supported by
, Star, Se Debit Payment Network
(FISV), or Shazam, the letter said.
Or Discover could be another network, but not a network backed by foreign governments like China’s UnionPay, the MPC said. The bill would only apply to financial institutions that have at least $100 billion in assets; MPC spokesperson J. It represents about 30 banks and one credit union in the US, said Craig Shearman.
Visa and Mastercard did not return messages for comment.
Jeffrey Tassey, president of the Electronic Payments Coalition, which represents card issuers and networks, strongly opposes the law. “It takes the choice out of the consumer’s hands when it comes to routing and destroys the value of global electronic payment systems,” he said. baron’s,
He said consumers don’t think about routing, and which networks are used to process credit card payments. But if they did, they’d likely choose a network they’ve used for years, versus an unknown one with no problems, Tassie said.
MPC’s Shearman said that right now, transactions made on Visa cards can only be processed on the Visa network and the same is true for MasterCard. “This is not a technical act, but simply that Visa and MasterCard prevent any other networks from handling their transactions,” Sheerman said.
Moshe Katri, a fintech analyst at Wedbush Securities, said apart from Visa and Mastercard, there are six to seven platforms that can process debit transactions. But there are no viable alternatives to Visa and Mastercard when it comes to processing credit transactions, he said. “Furthermore, there is no infrastructure in place to support having two alternative credit processing networks on credit cards. Bottom line, beyond political noise, it is impractical,” Katri said of the proposed legislation.
MPC’s Shearman disagrees. There are about a dozen other networks, such as NYCE, Star and Shazam, that can handle credit card processing, he said. These networks charge lower fees and offer better security, Sheerman said. “These networks have the ability to process credit card transactions, or can happen very easily,” he said.
The law also aims to bring savings for traders and consumers. The MPC said credit card charges are the biggest operating cost for merchants after labor. He also put the cost to the average American family at $900 in 2021. Introducing the competitive network would save US consumers and merchants $11 billion annually, MPC said, citing estimates from a payments consulting firm. Sheerman said the $11 billion saved is a fraction of the roughly $138 billion created by the issuer and the network.
Darin Peller, an analyst at Wolfe Research, said it’s unlikely the Senate will make any progress on the bill before the midterm election in November, according to a July 27 note. Peller said in the note that the law is unlikely to find substantial support in the House, especially if Republicans take control and even if Democrats retain a majority.
“We think it’s time to get it done before the end of the year,” said MPC’s Sheerman.
Write to Louisa Beltran at [email protected]