PIRG supports proposal to rein in Visa-Mastercard payments network duopoly

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WASHINGTON — PIRG, one of the leading consumer advocates in the United States for the past half-century, announced Friday that it is supporting a commonsense bipartisan bill that will indirectly protect U.S. consumers — and directly protect small businesses — from credit card fees. In response to the anti-competitive practices of Visa and Mastercard that affect Americans of all demographics, in “red” and “blue” states alike, Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS) and Reps. Peter Welch (D-VT) and Lance Gooden (R-TX) are sponsoring the recently introduced Credit Card Competition Act (S4674 and HR8874) in both houses of Congress.

The Federal Reserve recently unveiled new debit card routing rules, allowing circumvention of Visa and Mastercard’s duopoly. The Credit Card Competition Act would direct the Federal Reserve to require that the largest credit card-issuing banks similarly offer a choice of at least two unaffiliated networks to process credit transactions, as well as debit transactions. These actions build on the original 2010 Durbin Amendment’s reforms of the debit card market.

Statement of Ed Mierzwinski, Senior Director, U.S. PIRG Federal Consumer Program

“Choice promotes innovation and competition. The Credit Card Competition Act addresses a market failure in the payment networks long dominated by the Visa and Mastercard. It would require that merchants have choices unaffiliated with Visa or Mastercard to ‘route’ credit card payments to the consumer’s (issuing) bank.” 

“All consumers, including lower-income cash customers, pay more at the store and more at the pump due to the anti-competitive practices of the Visa-Mastercard duopoly. These card networks set both the rules and prices for merchants to accept electronic payments. Small businesses and others pass along those high card acceptance fees to consumers by baking them into the prices of every product, whether people pay with cash, credit or debit.

“Merchants cannot negotiate the fees or rules imposed by Visa and Mastercard. The Credit Card Competition Act would promote innovation, enhance security and offer choices that will benefit consumers as well as merchants.”