[Congressional Record Volume 170, Number 50 (Thursday, March 21, 2024)]
[Senate]
[Pages S2484-S2485]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                  Credit Card Competition Act of 2023

  Now, Mr. President, on a completely separate issue, last month, I 
invited the CEOs of Visa, Mastercard, United Airlines, and American 
Airlines to testify before the Judiciary Committee, which I chair, 
about competition in the credit card market.
  I have been working for nearly 20 years to break the Visa-Mastercard 
duopoly in the debit and credit markets, which would reduce costs for 
small businesses and lower prices for consumers.
  In 2006, I was the most junior member of the Judiciary Committee when 
I first learned about interchange fees. I literally didn't know they 
existed. They are known as swipe fees as well. These are fees that are 
deducted every time you swipe your debit or credit card and paid to the 
bank that issued the card.
  For debit transactions, this fee is now capped at 21 cents, plus .05 
percent of the transaction. That is because of legislation which is 
known either in an honorable way or in a questionable way as the Durbin 
amendment that I wrote in the year 2010. However, for credit card 
transactions, interchange fees are much higher--in the range of 2 to 3 
percent. That means if you go to a restaurant and pay $20 for your 
meal, 40 to 60 cents goes to the bank that issued the credit card you 
used to pay for the meal.

  This may not sound like a lot, but it adds up. It is estimated that 
businesses paid more than $100 billion in swipe fees on Visa- and 
Mastercard-branded cards in 2023 alone. In fact, swipe fees can be 
small businesses' second highest cost behind only the cost of labor.
  Small businesses have no choice but to pay the fees. Visa and 
Mastercard control more than 80 percent of the U.S. credit card market, 
accounting for 576 million cards. They use this power to dictate 
interchange fees to businesses. It is a take-it-or-leave-it 
proposition.
  Because margins at these small businesses are often low, they feel 
compelled to pass on these fees directly to consumers in the form of 
higher prices. This means all of us--whether you pay with a credit 
card, a debit card, or cash--are subsidizing banks like JPMorgan Chase, 
which just announced it made $49.6 billion in net income in 2023--the 
most in the history of the American banking industry.
  Thankfully, there is an answer or a solution to the problem. The 
Credit Card Competition Act, a bipartisan bill I introduced last year 
with Republican Senator Roger Marshall of Kansas, would inject much 
needed competition into the credit card market and break the Visa-
Mastercard stronghold.
  Here is what our bill says: If a bank with $100 billion or more in 
assets--only 30 banks, incidentally, qualify--wants to issue a credit 
card on the Visa or Mastercard network, it would have to offer a second 
network other than Visa or Mastercard to process transactions.
  That is known euphemistically as competition. In this way, merchants 
will finally have a choice. If Visa or Mastercard offers the best 
service or security or the lowest cost, the merchant can use it, but if 
the other network offers a better deal, the merchant can choose that 
instead. That is known as competition.
  By forcing Visa and Mastercard to actually compete for merchants' 
business, we are aiming to end the cycle of increasing interchange fees 
that is breaking the backs of small businesses.
  As you can imagine, Visa, Mastercard, and their big bank partners 
don't like our bill.
  The bill is expected to save merchants and consumers $15 billion 
every year in interchange fees. That is $15 billion a year coming out 
of the pockets of Wall Street banks and into the pockets of American 
consumers.
  That is why the credit card companies and banks have poured more than 
$51 million into lobbying efforts to defeat my bill--$51 million. They 
have also enlisted airlines in their effort. An article in The Atlantic 
recently explained why:

       Airlines are just banks now. They make more money from 
     [their] mileage programs [and credit cards] than from flying 
     airplanes.

  So as you think of a major airline, like United Airlines, it is 
basically a credit card company that owns some planes. That is why 
anyone who has traveled through the airport here in DC, watched TV, or 
used the internet is probably seeing ads claiming ``Dick Durbin wants 
to take away your credit card rewards.'' The problem in these 
breathless claims is that they are false. Rewards programs will be 
alive and well long after the Credit Card Competition Act becomes law. 
We know this from data, real-world experience, and common sense.
  Let's start with data. One study found that my bill would have a 
negligible impact at most on rewards and noted that banks' swipe fees 
provide a more than sufficient margin to maintain current reward 
levels. That is a far cry from what consumers suffered when United 
Airlines recently devalued its miles for international travel last 
summer.
  These findings are consistent with the experiences of other 
countries. Other countries have decided to protect their consumers from 
these swipe fees with their credit cards. Australia capped the 
interchange fee at 0.8 percent in 2003. The European Union

[[Page S2485]]

capped interchange fees at 0.3 percent in 2015.
  Rewards programs haven't gone away in either place. In fact, most 
major European airlines offer rewards programs that are comparable, if 
not better, than the ones offered in the United States. The reason is 
simple: Banks have to compete against each other for customers, and 
there are few things that make one credit card more attractive to a 
customer than others, other than perhaps a better rewards program. This 
dynamic won't change when the Credit Card Competition Act becomes law.
  That brings me back to the hearing. The Judiciary Committee last held 
a hearing on competition in the credit card market in May of 2022. Visa 
and Mastercard have increased their fees since that hearing and are 
planning to do so again next month. Even in the midst of concerns about 
inflation, they keep raising this fee over and over again, even as 
consumers are trying to fight the fires of inflation.
  That is why I invited the CEOs of Visa, Mastercard, United Airlines, 
and American Airlines to come testify before the Judiciary Committee on 
April 9.
  Guess what? All four CEOs rejected my invitation. They are just too 
darn busy to come and explain the major source of profits for their 
businesses. They are too darn busy to come explain what they are doing 
to consumers and families across America.
  Some say: We just don't understand the issue well enough to testify 
before your committee.
  They are the CEOs of the company, and they don't understand the 
issue? Like their attacks on my bill, the CEOs' excuses why they can't 
appear before the American people to answer questions don't hold water.
  Killing the Credit Card Competition Act has been and remains a top 
priority for these companies, as evidenced by the more than $51 million 
lobbying effort that they have undertaken against my bill. I guess I 
should feel flattered that they would spend $51 million lobbying to try 
to stop this legislation; but, frankly, it infuriates me that they 
won't come before this committee under oath and testify, yet they are 
spending all this money in secret fashion.
  Several of the CEOs have been personally engaged in this issue. Scott 
Kirby, who is the CEO of United Airlines, told investors that my bill 
is ``bad policy'' and that he had personally ``spent a fair amount of 
time in DC talking about [the bill].'' Mastercard CEO Michael Miebach 
told investors he was ``closely engaged'' in efforts to defeat this 
legislation.
  If these CEOs are willing to discuss the Credit Card Competition Act 
with Wall Street investors and lawmakers behind closed doors, they 
should be willing to answer questions before the Senate Judiciary 
Committee and the American public under oath.
  If the credit card market really is working for small businesses and 
consumers, then I say to Ryan McInerney, Michael Miebach, Scott Kirby, 
and Robert Isom: You should have nothing to hide. The fact that you are 
refusing to appear and publicly defend your skimming of every credit 
card transaction in America speaks volumes.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Lujan). The Senator from Arkansas.