The Credit Card Industry Is Terrified of Competition 
COMMENTARY

November 16, 2022by Doug Kantor, General Counsel, National Association of Convenience Stores
The Credit Card Industry Is Terrified of Competition 
A historic bank facade in Philadelphia, Pa. (Photo by Dan McCue)

The credit card industry is terrified of free market competition. So much so that it’s trying to conflate it with, of all things, price controls. But it’s nothing more than a desperate, smoke-and-mirrors diversion to ensure that Visa, Mastercard and major banks continue raking in record profits off the backs of consumers. 

It’s hard to understand anyone finding fault in the bipartisan, bicameral Credit Card Competition Act, a bill that introduces competition into the market for credit card swipe fees where it does not exist today. Especially when it doesn’t include price caps or any government regulation of prices. Just competition, pure and simple.

Price control language cannot be found anywhere in the bill text, yet opponents continue to falsely claim that the act includes such provisions.

Why?


It’s because the credit card industry can’t argue that competition is a bad thing. In fact, the American Bankers Association claims on its own website that fees should be set by market competition — even though that isn’t the case today. And credit card users certainly aren’t buying that increasing competitive pricing at restaurants, gas stations and supermarkets can be anything but beneficial to their bank accounts.  

Thus, the credit card industry has resorted to fabricating price-control fear mongering around the Credit Card Competition Act to prevent their own biggest fear from coming to fruition: a competitive credit marketplace that disrupts the Visa/Mastercard duopoly. 


Visa and Mastercard control 83% of the credit card market and centrally set the prices that the giant Wall Street banks charge merchants. Talk about price fixing — it’s no wonder that swipe fees continue to soar when the banks won’t compete on price.

And while this system certainly has proven profitable for big banks and credit cards, it’s American businesses and, ultimately, their customers that continue to pay more. The United States is home to the highest credit card swipe fees in the industrialized world — nearly $140 billion just last year. That’s more than $900 in additional annual spending coming out of the pocket of every American family.

That’s why passing the Credit Card Competition Act this session is so necessary. The legislation would direct the Federal Reserve to ensure that banks with over $100 billion in assets (which only applies to about 30 of the biggest banks in the U.S.) offer a choice of at least two networks — like NYCE, Star or Shazam — for electronic credit transactions to be processed. 

The introduction of choice means networks would finally have to compete to offer the best pricing, security and service — a win for businesses and consumers alike. The only thing we stand to lose is higher fees and product prices, something that millions of people already feeling the squeeze of inflation surely won’t mind. 


Wall Street should stop spinning fake narratives around price controls and practice what they preach by joining the bevy of support for the Credit Card Competition Act. It’s time to start putting people, not profits, first. 


Doug Kantor is the general counsel for the National Association of Convenience Stores. He lobbies for NACS on issues that advance convenience and fuel retailing. You can find them on Twitter @NACSonline

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