U.S. Reps. Peter Welch (D-VT) and Lance Gooden (R-TX) introduced legislation on Monday that seeks to bring increased competition and choice to the credit card network market.
The Credit Card Competition Act of 2022, H.R. 8874, is a companion bill to similar legislation introduced in July by U.S. Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS).
“Credit card companies and mega banks keep finding new ways to squeeze our small retailers in Vermont,” Welch said. “In a well-functioning market there is competition and choice. 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 Credit Card Competition Act of 2022 would require that banks with assets of more than $100 billion allow electronic credit transactions to be processed on no fewer than two unaffiliated networks, at least one of which must be outside the Visa-Mastercard duopoly. This will inject competition into the credit card market – lowering the barrier to entry for new entrants, encouraging innovation, and exerting competitive pressure on fee rates.
“For too long major credit card companies and the nation’s top financial institutions have collaborated to sideline community banks and local retailers in Texas,” Gooden said. “Our free-market economy cannot exist without healthy competition, and I am proud to introduce legislation to fulfill my pledge to protect small businesses and ensure these companies can no longer use their monopolistic power to crush their competition.”
Currently, Visa and Mastercard account for about 83 percent of credit cards, which gives them leverage to impose fees on merchants, the lawmakers said. As a result, U.S. merchants pay some of the highest fees in the world – and those fees are then passed on to consumers.