Durbin amendment author says card brands are trying to ‘get even’

Durbin amendment author says card brands are trying to ‘get even’

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Sen. Dick Durbin, D-Ill., went after Visa and Mastercard during an antitrust hearing Thursday in Washington, suggesting the card brands have likely been looking for a way to increase fees and offset previous legal or regulatory pressure on their pricing structures.

Durbin, the chairman of the Senate Judiciary Committee, made his remarks about a week after he and Rep. Peter Welch, D-Vt., sent a letter to the card brands asking them to hold off the planned April interchange rate structure changes because of the damage the pandemic has laid on merchants the past year.

Durbin authored the 2010 amendment that capped debit card fees at certain banks and established a transaction routing choice for merchants, a change that became law and leveled the playing field for independent debit networks competing against the major brands.

“They didn’t forget,” Durbin said, referring to his earlier legislation. “They’re waiting for an opportunity to get even again. Where is the policing authority to stop this duopoly from doing this to every merchant and retailer in America?”

Interchange fees are “far in excess of any reasonable measure of cost” and far higher than they would be in a competitive market, according to Senator Dick Durbin, D-Ill.


Durbin explained that he views the pricing as reflective of the power Visa and Mastercard possess.

The interchange fees “were not negotiated — they were mandated,” Durbin said, referring to what he learned about swipe fees during previous hearings. “Visa and Mastercard said this is what you will pay for each transaction at your restaurant or shop and you have no bargaining power whatsoever. If you don’t want to pay it, don’t use Visa or Mastercard. See how long you last.”

Durbin said the fees are “far in excess of any reasonable measure of cost” and far higher than they would be in a competitive market. Visa and Mastercard are “so dominant in the payments market that merchants couldn’t stay in business without using their cards,” he added.

The April increase will come “just in time for your little restaurant that somehow managed to survive and reopen in a pandemic to go into business and have your credit card company say now you’re going to pay us even more,” he said.

The cost of swipe fees is “ultimately borne by consumers across America” because they drive up prices, Durbin added.

Visa and Mastercard have indicated some forthcoming adjustments to interchange, some of which call for decreases in certain retail segments, with Visa saying in-store card-present rates would essentially stay the same. E-commerce or card-not-present rates are expected to increase because of the higher fraud risk and fraud’s explosive growth during the pandemic.

The Merchants Payment Coalition voiced support for Durbin’s viewpoints at the antitrust hearing.

“This draws attention to a vitally important issue — that credit card swipe fees are already too high and Visa and Mastercard are trying to use their power to raise them even higher on the backs of small businesses during the middle of a pandemic,” MPC counsel Doug Kantor said in a press release. “Senator Durbin’s concern that Visa and Mastercard are trying to ‘get even’ is right on the mark and his question of what can be done to bring them under control is one that needs to be answered by Congress and the enforcement agencies.”

The fees in the U.S. are among the highest in the world and neither merchants nor their customers “can afford to pay more,” Kantor added.

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