[Congressional Record Volume 168, Number 75 (Thursday, May 5, 2022)]
[Senate]
[Pages S2344-S2346]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Inflation

  Mr. DURBIN. Mr. President, yesterday the Federal Reserve raised 
interest rates by half a percentage point, the biggest rate hike in 22 
years. The effort is underway to stop inflation. For millions of 
American families who are struggling to pay their bills and afford the 
basics, this can't come fast enough. The U.S. economy has added nearly 
1.7 million jobs this year. Consumer spending is strong, but higher 
costs for groceries, gas, housing, and more are straining family 
budgets and making people very anxious about their future.
  In announcing the interest rate hike yesterday, Federal Reserve 
Chairman Jerome Powell said the following: The biggest drivers of 
inflation today are higher prices caused by Russia's war on Ukraine and 
rising COVID cases in China, which can further disrupt supply chains. 
In other words, the Federal Reserve Chairman said two of the biggest 
drivers of inflation are really global; they are complicated; and they 
aren't going to be solved by America alone.
  Fortunately, there are some simple solutions we can take to help 
families save money. Let me tell you about three of them. The first is 
to cut gas prices. I can't think of a single cost of living that is 
more visible. Every street corner in America has a sign declaring what 
the cost of a gallon of gasoline is, and people compare these in their 
mind even as they drive down the road. Some people make a hobby of it. 
Anyone who has filled up a gas tank in the last few months has felt the 
sticker shock of Mr. Putin's war on Ukraine.
  President Biden has already made two changes that will reduce gas 
prices. A little over a month ago, he announced the United States will 
release 1 million barrels of oil a day from its Strategic Petroleum 
Reserve--in

[[Page S2345]]

other words, to increase the supply in an effort to bring down the 
price--1 million gallons a day for 6 months, while oil companies ramp 
up domestic production to make up the shortage caused by Mr. Putin's 
war.
  President Biden also has issued an emergency fuel waiver allowing E15 
gas--that is gas with a higher blend of ethanol--to be sold across 
America this summer. Normally E15 isn't sold in the summer, but the 
White House estimates that by allowing gas stations to sell it, it will 
save Americans 10 cents a gallon.
  Of course, if we are really serious about cutting gas prices and 
reducing the power of tyrants like Putin whose nations happen to sit on 
big oil reserves, we can do that by investing more in electric cars and 
clean energy sources that don't break the bank or bake the planet.
  Here is another solution that can save millions of families hundreds 
of dollars every single month. Let's agree to cap the monthly cost of 
insulin for diabetes at $35. In 1923, almost 100 years ago, researchers 
in Canada were awarded the Nobel Prize for the discovery of insulin to 
manage diabetes. They sold the patent--listen carefully--for this drug 
discovery for $1. They wanted to make sure that no one would ever 
profit from this lifesaving drug.
  Fast forward 100 years. Something has gone terribly wrong. The same 
vial of Humalog insulin that Eli Lilly sells for $40 in Canada, it 
charges $350 for in the United States--40 in Canada, 350 here. The 
maker of Lantus insulin has raised their price more than 26 times since 
the year 2000: from $35 to more than $300 today--26 price hikes in 22 
years.
  The cost of insulin can range from a couple hundred dollars a month 
to more than $1,000 a month. That is the price this year. Who knows how 
much it will be next year. Who bears the burden of these costs? 
Patients and families. There are 37 million Americans who have 
diabetes. The number goes up every year.
  Senator Warnock of Georgia has introduced a critical bill, the 
Affordable Insulin Now Act, to cap the monthly cost of insulin at $35 a 
month. I am a cosponsor. Many Senators are. Senator Collins and Senator 
Shaheen are spearheading a similar bipartisan effort to support it.
  I urge more of our Republican colleagues to listen to the people they 
represent. There are lots of people struggling to afford insulin in 
their States as well as the blue States. Let's do this together. Can't 
we agree on one thing in the U.S. Senate that we are going to do to 
help America this year? I think this is a good project and a good goal.
  The third way we can reduce inflation is a little more complicated, 
but it is worth talking about. We need to rein in the excessive fees 
charged by Visa and Mastercard for their products.
  We had a hearing yesterday. It was in the Senate Judiciary Committee. 
It was on something called a swipe fee. Of course, the swipe fee is the 
amount of money that has to be paid in order to move that piece of 
plastic through the machine. Most consumers don't even know it exists. 
Every retailer knows it exists.

  It was the first hearing our committee has held on this topic in 16 
years--16 years. And I was there 16 years ago. I walked into the Senate 
Judiciary Committee, chaired by the Senator from Pennsylvania, Arlen 
Specter, and the hearing was on swipe fees and interchange fees. I had 
never heard of the term before, and I sat down and I learned.
  What happened in that meeting was an exposition of the current 
situation for every restaurant that you go to buy a meal in, every 
store that you shop in, all the grocery stores. Any store that takes 
plastic knows what a swipe fee or an interchange fee is.
  Here is how it works. Visa and Mastercard control over 80 percent of 
the credit and debit card markets in the United States--starting point. 
It isn't as if you can walk away from these two companies and be a 
retailer in America. If you are going to take plastic, you are going to 
take these cards.
  And every time a card with a Visa or Mastercard logo is swiped at the 
retailer, Visa and Mastercard charge a fee that takes a cut out of 
whatever the transaction amount turns out to be. Now, some of that cut 
Visa and Mastercard keep for themselves. Most of it is given to the 
bank that issues the card.
  The fee that Mastercard and Visa require the card-accepting merchant 
to pay to the card-issuing bank is the interchange fee. It is usually 
charged as a percentage of the transaction plus a flat fee, for 
example, 2 percent of whatever the transaction cost is plus 10 cents.
  How does that work out in practice? Just an example: Say you buy $100 
worth of groceries or kids' clothes on your credit card. After the fees 
are deducted, the merchant gets $98, maybe a little less. For merchants 
operating on tight profit margins--and that is most of them--these fees 
can add up to a big problem.
  Laura Karet was one of our witnesses yesterday. She is an amazing 
woman. What a resume. She is the CEO of a supermarket chain known as 
Giant Eagle. It is a regional, American-owned chain of grocery stores 
based in Pittsburgh, PA. At our hearing yesterday, she explained that 
her industry--groceries--typically operates on a 1-percent profit 
margin--1 percent. So the 2-percent swipe fee wipes out their entire 
profit.
  What do they do? Well, there is only one obvious answer: They raise 
the prices to cover the high swipe fees required by Visa and 
Mastercard, and customers end up holding the bag.
  Remember, we started this conversation about inflation. Make no 
mistake, what I have just described to you is inflationary.
  Swipe fees aren't just annoying to the retailers; they are anti-
competitive. Ms. Karet told us the story that on April 22, she received 
the latest modification of the swipe fees being charged to her 
businesses by Visa and Mastercard. She said the modification was 300 
pages long, almost unintelligible. She handed it over to her 
accountants and to her lawyers and said: Make some sense out of it. 
What are they doing to me?
  The banks get the swipe fees, but the banks do not set the fees. 
Banks let Visa and Mastercard do the behind-the-scenes work and fix the 
fees. That means that all the thousands of card-issuing banks in the 
Visa and Mastercard network receive the same exact schedule of swipe 
fees from merchants regardless of whether they are efficient or 
inefficient, regardless of whether or not they are preventing fraud. It 
is a free lunch for the banks.
  When the fee rates go up, as they did just a few weeks ago, banks 
make more money every time people use plastic--debit or credit cards--
and they issue more cards. That benefits Visa and Mastercard, which 
take their cut, called a network fee, out of each swipe. So Visa and 
Mastercard have an incentive to keep raising fees.
  What can merchants do? Well, you might think they would sit down at 
the table and say: We are going to bargain about this fee, Visa and 
Mastercard. We object to it being raised, and we want to let you know 
that if you want to do business with our business, that is the way it 
will be.
  That doesn't happen at all. This is noncompetitive. Visa and 
Mastercard control 80 percent of the plastic market in America. They 
say to the grocery store, to the restaurant, to the shop: Take it or 
leave it. Play by our rules or you won't play at all. We just won't 
even let people present their cards at your business.
  Visa and Mastercard tell merchants, if they want to be able to accept 
payment from thousands of banks in their networks, the merchants must 
agree to Visa and Mastercard's fees and terms. Take it or leave it. 
Only merchants can't leave it. Visa and Mastercard, as I have said 
repeatedly, control 80 percent of the credit and debit card market.
  Incidentally, the figures from 2020 show--I am going to roughly 
approximate these, and I will clear them up in the Record--86 billion 
transactions using debit cards, 41 billion transactions using credit 
cards in the year 2020. How does that compare with cash and check? 
Cash, if I remember right, was 32 billion compared to 120 billion for 
plastic. And what about checks? How many people are writing checks? It 
was 5 billion transactions compared to plastic, which was over 120 
billion.
  The reality is, when swipe fees go up--and they do regularly--that 
cost

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gets built into the price consumers pay at the checkout counter and at 
the gas pump.
  Remember those gas prices? You wonder why they are hitting $4 a 
gallon, $5 a gallon? They include the swipe fees, the credit card fees, 
the debit card fees that are being added on to the cost of gasoline.
  Take a look at this chart. In the 16 years between the first hearing 
in the Senate Judiciary Committee--one that I attended on swipe fees--
and now, Visa and Mastercard have imposed $794 billion in swipe fees--
fees passed on directly to American families and consumers. That is a 
staggering amount--$794 billion, for the hidden fee you never see.
  Visa and Mastercard just raised these fees again 2 weeks ago. Senator 
Marshall, my Republican colleague from Kansas, and I sent them a letter 
saying this is exactly the wrong time to be raising your fees. It is 
tough enough for these businesses trying to hire people and get back 
into business after COVID-19, tough enough for families who are 
fighting inflation. Why do you have to raise them now? You are very 
profitable companies. The banks are doing quite well, too, I might add. 
They did it anyway.
  These fee increases are adding to inflation. The market can't fix the 
problem because the credit and debit card market isn't competitive. The 
retailers have no voice in what this fee is going to be. It is ``take 
it or leave it.'' Visa and Mastercard have what they call a duopoly--
not a monopoly, one company controlling everything--but these two 
companies, Visa and Mastercard, control over 80 percent of the plastic 
market.
  What can we do about it? Well, in our hearing, we talked about 
several responses. First, let's bring transparency to the market. The 
last thing that either Visa or Mastercard want to see is sunlight--
people understanding what they are charging, why they are charging, the 
impact it has on prices, the impact on inflation. They want this to 
continue to be a deep dark secret buried in 300 pages of legal 
gobbledygook that they sent to the retailers.
  If consumers knew how much their Visa and Mastercard purchase cost at 
the local restaurants or businesses, they might try using a less costly 
card and there are some out there. It would be like giving the business 
a tip, and it would help bring down prices.
  So why not require banks to show on their monthly statement that they 
send to us with their credit-debit card transactions how much of that 
was swipe fees? They could do it in a second. They wouldn't dare. They 
can't ever embrace transparency. That is just about part of this 
process. It is all in secret, in code, and legal gobbledygook. I will 
bet that would open a lot of eyes if you saw each month how much we are 
paying in swipe fees.
  Incidentally, Ms. Karet talked about her supermarket chain. She said: 
The three main expenses we have for my supermarket chain in 
Pennsylvania, Indiana, and Ohio are No. 1, labor costs--understandable; 
No. 2, rent--that is understandable as well; No. 3, credit-debit card 
swipe fees. She estimated that it is going to cost her $1 million or 
more in her businesses based on what Visa and Mastercard just did two 
weeks ago to raise the fees.
  Here is another way we can reduce inflation. Let's prevent Visa and 
Mastercard from hiking swipe fees up to unreasonable levels.
  Yesterday, I pointed out that in Canada, the most commonly used debit 
card system, called Interac, operates with interchange fees of zero. 
There is no interchange fee. All the arguments that the banks and 
credit cards make in this country about why they have to charge these 
retailers these hidden fees disappear in Canada because why? The 
government stepped in. They said: We are going to regulate this. We are 
not going to let the banks and credit card-debit card companies dictate 
the policies in our country.
  They are not alone. The European Union did the same thing. There is a 
long list of other countries that are moving in that same direction. It 
operates quite well in these countries with low fraud and high consumer 
satisfaction.
  We don't have to eliminate interchange fees all together, but for 
goodness sake, we ought to make sure they are not excessive and not 
adding to inflation.
  There are two ways we can do it: Promote something called 
competition. Are you a dyed-in-the-wool capitalist; do you believe in a 
free market? I bet you believe in competition, don't you? There is no 
competition in these fees. It is ``take it or leave it.'' These plastic 
companies dictate these terms to the retailers that honor their cards. 
We can promote competition by giving merchants more options on each of 
the swipes or place reasonable limits on their fees. Other countries, 
as I said, figured it out. Many countries around the world say that 
swipe fees are a fraction of the cost of what they are here because 
those nations limit Visa and Mastercard.
  We are afraid to tackle the giants. Our government and the people 
that work in this Chamber--many of them are frightened by the size of 
Visa and Mastercard. I didn't get that message. We can do better here. 
If we do, consumers and competition will benefit.
  The bottom line is this: If you are serious about reducing costs for 
American families, get serious about reining in swipe fees. Visa and 
Mastercard swipe fees are adding to the fires of inflation every single 
day and they are doing it in secret. Is that what we want in our 
economy? Is that what American families need at this moment in history? 
I think not.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Schatz). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  The PRESIDING OFFICER. The majority leader.
  Mr. SCHUMER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.