Senators Warn Visa, Mastercard Credit Card Practices Can’t Last

Some Republican senators signaled support for a legislative effort to rein in the power Visa Inc. and Mastercard Inc. wield in the credit card market as they grilled the companies about the swipe fees they charge merchants and consumers.

The Credit Card Competition Act (S. 1838) from Senate Judiciary Chairman Dick Durbin (D-Ill.) is unlikely to come up for a vote in the lame-duck period. But a parade of senators during a Tuesday hearing before the Judiciary panel warned officials from Visa and Mastercard that legislative action should be expected if they can’t find a solution on their own.

“Let me just say this to all of you: I don’t know how we vote if this bill came up today,” said Sen. John Kennedy (R-La.), who also sits on the Senate Banking Committee. “Visa and Mastercard and the retailers need to sit down and work this out. Because if you don’t, Congress is going to do something.”

Sen. Thom Tillis (R-N.C.) has opposed the bill, but he said at the hearing that “small businesses have a legitimate concern.” That could add pressure in the next Congress if the retailers and credit card companies don’t “figure this out,” he said.

Durbin’s legislation, introduced last year with bipartisan support, is designed to cut into the market share of Visa and Mastercard, which account for over 80% of general-purpose credit cards, according to the senator. The bill would require the largest credit card-issuing financial institutions—those with assets over $100 billion—to enable at least two credit card networks, including one outside of Visa and Mastercard.

Durbin has argued the measure will promote more competition and help to slash retailer transaction swipe fees that have progressively spiked over time. US merchants paid more than $170 billion billion in swipe fees in 2023, including through credit and debit cards, according to industry publication the Nilson Report—a roughly 7% hike over the previous year.

Legal Scrutiny

The Judiciary Committee’s hearing comes as Visa and Mastercard face growing legal pressure over their practices, and as President-elect Donald Trump has proposed capping credit card interest rates at 10%.

Visa and Mastercard separately reached a $30 billion deal with retailers earlier this year to cap credit card swipe fees, though a New York federal judge blocked it. Visa in September was also hit with an antitrust lawsuit by the Justice Department alleging it maintains an illegal monopoly in the debit card market. Visa denies the charges.

Officials from the two companies testified on Tuesday, touting their data and security practices and what they called healthy competition. The Bank Policy Institute, representing major US banks, also renewed its criticism of the bill in an open letter to the panel.

The bill would impose “artificial controls on a system that is working well,” while also hurting consumer choice and eroding security, Linda Kirkpatrick, president of Mastercard’s America’s region, told the Judiciary panel.

Kirkpatrick also cited a prior debit card swipe fee regulation, known as the Durbin Amendment, which she claimed raised fees and made it harder for companies like Mastercard to compete with Visa. That amendment, part of the 2010 Dodd-Frank Act, required the Fed to write rules to limit the swipe fees debit card providers and card networks could charge retailers to what was “reasonable and proportional” to the costs of processing the transactions.

The latest credit card legislation spearheaded by Durbin is cosponsored by Republican Sens. Roger Marshall (Kan.) and Josh Hawley (Mo.), as well as incoming Vice President JD Vance (Ohio).

The bill failed to gain much momentum during this Congress despite the GOP support, though Durbin could still push to attach it to year-end defense or spending legislation.

Still, Tuesday’s hearing signaled an openness from several lawmakers. Sen. Lindsey Graham (R-S.C.) questioned various witnesses on regulations in Europe, where average interchange fees are substantially lower than in the US.

Visa and Mastercard are “having a hard time convincing me that the fees are to the advantage of the consumer,” he said.