In order to increase competition in the market for credit card payments, a bipartisan domestic bill introduced Monday seeks to allow merchants to route credit card payments over networks not operated by Visa (New York stock market :V) or MasterCard (New York stock market :MY).
“This bipartisan bill will fix that and bring much-needed competition to the Visa-Mastercard duopoly,” said Rep. Peter Welch (D-VT), who introduced the bill with Rep. Lance Gooden (R-TX). “This long-awaited bill will help our small businesses thrive and reduce household costs for families at a time when they really need it.”
The two largest card networks account for about 83% of general purpose credit cards, Welch said. This gives them the power to impose fees on merchants, who have few alternatives.
Called credit card competition from 2022, the legislation is expected to cut costs for businesses and families by requiring banks with assets of more than $100 billion to allow electronic credit transactions to be processed on no less than two unaffiliated networks, and at least one of which must be outside the Visa-Mastercard duopoly.
Update at 3:47 p.m. ET: The Electronic Payments Coalition, which represents credit unions, community banks, payment card networks and other institutions involved in electronic payments, said the legislation would benefit large retailers like Walmart (WMT), Target (TGT), and others.
“This legislation would again increase retailer bottom line at the expense of American consumers – depriving them of their credit card rewards and usurping their network choice while leading to a less secure, less innovative and weaker financial system,” said Chairman of the EPC Board of Directors. Jeff Tassey. “EPC strongly opposes this legislation and encourages US elected officials to do the same.”
In July, Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) introduced the Senate version of the bill.
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