Senate Judiciary Committee Hearing on Credit Card Competition Act

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On Tuesday, the Senate Judiciary Committee held a heated hearing on the Credit Card Competition Act (CCCA), focusing on Visa and Mastercard in the credit card processing market. The proposed legislation seeks to break their dominance, fostering competition to reduce fees for retailers and consumers. The testimony revealed stark divisions between proponents advocating for the CCCA and industry representatives defending the current system.

Sen. Dick Durbin (D-Ill.), chairman of the committee, highlighted the $100 billion in annual credit card fees, mostly interchange fees, borne by businesses and consumers. He argued the legislation would force financial institutions with over $100 billion in assets to offer merchants an alternative processing network.

"This is about competition, not regulation," Durbin stated, emphasizing that savings from reduced interchange fees could lower consumer prices and help small businesses thrive.

Sen. Roger Marshall (R-Kan.) added that swipe fees, which he called “inflation multipliers,” cost the average American family $1,100 annually and contribute a $300 billion yearly burden on retailers and consumers. He tried to dispel what he called “misconceptions” about the CCCA, clarifying that the bill does not cap fees but encourages competition and improves security by requiring banks to offer at least two processing platforms.

“The recent Senate Judiciary Committee hearing on the Credit Card Competition Act failed to include testimony from credit unions and community financial institutions—key stakeholders directly impacted by this legislation,” said Jim Phelps, EVP/chief advocacy officer for Cornerstone League. “This omission is very disappointing. The CCCA is not about fostering genuine competition; instead, it will pave the way for massive financial gains for big-box retailers at the expense of local financial institutions and the communities they serve. If enacted, it will severely undermine the credit card programs that credit unions offer, which are tailored to provide members with safe and reliable access to credit.” 

More details from the hearing

Chris Callahan, a bookstore owner in Vermont, testified to the strain swipe fees place on small businesses like his. He urged lawmakers to pass the CCCA to level the playing field.

“We’ve seen fees jump from 2.4% to 3.8%—a nearly 60% increase,” Callahan said, estimating that fees cost his store $9,000. “This is a silent tax on businesses. We have no control over it and no negotiating power.”

Bill Sheedy, senior advisor to the CEO of Visa, and Linda Kirkpatrick, president of Americas at Mastercard, argued that their systems provide unparalleled security and convenience and that the proposed legislation would harm consumers.

“Merchants benefit from guaranteed payments even in cases of fraud,” Sheedy noted, while Kirkpatrick stressed that 40% of its operations focus on fraud protection.

The bill “will almost certainly lead to detrimental effects across the payments ecosystem—reduced card choice, increased cardholder confusion, billions of dollars in sunk costs from reissuing hundreds of millions of credit cards, higher bank fees, fewer rewards, and riskier transactions on less secure networks,” said Kirkpatrick, adding that the bill would remove incentives to invest in technology to combat fraud.

Bill Sheedy, senior advisor to the CEO at Visa, said the bill is not only unnecessary but potentially “deeply harmful” to competitiveness and innovation in the payments industry. 

“Everyone thrives when we strive to maintain the success and security of payments through dynamic market-based competition, without static regulatory mandates that would create significant inefficiencies, impede security, stifle innovation, and undermine the freedom to choose payments that American consumers and merchants enjoy today,” Sheedy said. 

Both company leaders pointed to innovations like contactless payments as proof of a competitive market and cited alternatives such as digital wallets and cryptocurrency.

Professor Roger Alford of Notre Dame Law School emphasized that Americans pay significantly more in swipe fees than their European counterparts, where fees are capped at 0.3%. Competition has successfully reduced costs without eroding service or quality, he said.

Senators across the aisle expressed frustration with the current system. They compared the U.S. model to the European model and noted that Mastercard and Visa operate there despite the 0.3% cap.

Sen. Josh Hawley (R-Mo.) highlighted Visa and Mastercard's market dominance, with a combined control of 80%, calling it a monopoly.

“You’ve increased the swipe fees, even though your profit margins are huge,” Hawley said. “This is not a sustainable situation. This has to change. If you guys can’t change, we will have to do something about the situation for you.”

While some lawmakers expressed confidence that nothing would be done on the bill in the lame-duck session, they implied there could be changes next year.