11.19.24

Durbin Questions Visa Witness During Senate Judiciary Committee Hearing On Enhancing Competition In The Credit Card Market, Lowering Fee

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, today questioned Mr. Bill Sheedy, Senior Advisor to the CEO of Visa, Inc., during a Senate Judiciary Committee hearing entitled “Breaking the Visa-Mastercard Duopoly: Bringing Competition and Lower Fees to the Credit Card System.” The hearing examined the lack of competition in the credit card market and its impact on interchange fees, as well as legislative solutions like Chair Durbin’s Credit Card Competition Act to help protect consumers.

Durbin first highlighted the skyrocketing cost of interchange fees in the U.S. verse the European Union (EU). In the EU, credit card interchange fees are capped at 0.3 percent of the payment value for most transactions, and in Australia they are capped at 0.8 percent. Despite these lower interchange fees, Visa and Mastercard both continue to operate secure and efficient credit card networks in both Australia and the EU, and banks there continue to issue credit cards that offer rewards.  

“The bottom line is that they [Visa and Mastercard] are profitable in Europe even when restricted to 0.3 percent interchange fees. It is also very clear that when it comes to these interchange fees and the frequent flyer programs, they are still offering them in Europe,” Durbin stated.

He then sarcastically asked Mr. Sheedy, “To me, as I sit here and look at the situation, I ask, how can you possibly do business in Europe when the interchange fee is restricted to the maximum of 0.3 percent?” Durbin asked.

Durbin then asked Mr. Sheedy about what Visa’s then-Vice Chairman and Chief Financial Officer, Mr. Vasant Prabhu, said in a January 2022 earnings call in which he stated, “[T]o the extent that there’s inflation, driving up ticket size, clearly, it’s beneficial to us…So net-net, I mean we are a beneficiary of inflation.”

“How is that possible?” Durbin asked.

Mr. Sheedy responded, “I don’t think of Visa being a beneficiary of inflation.”

“So as American families are struggling to survive because of inflation, you are doing well as long as the ticket size goes up and your percentage applies, correct?” Durbin asked.

Mr. Sheedy responded, “I don’t believe that inflation is good for our business or anyone's business. A healthy economy is the best for the U.S. consumer and U.S. merchants. And when U.S. merchants and U.S. consumers come together and transact, that drives transactions and that is what we want, and how we think about growing the business.”

Durbin concluded, “You are benefiting from the weakness in our economy and the impact on families and consumers. What we’re trying to do is to do something that you said you are in favor of. Competition benefits everyone. Why not some competition for Visa and Mastercard?”

Video of Durbin’s questions in Committee is available here.

Audio of Durbin’s questions in Committee is available here.

Footage of Durbin’s questions in Committee is available here for TV Stations.

 In Congress, Durbin has made it a priority to protect consumers. Durbin’s Credit Card Competition Act is bipartisan legislation that would enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly. 

Building off of debit card competition reforms enacted by Congress in 2010, the Credit Card Competition Act would direct the Federal Reserve to ensure that the largest credit card-issuing banks offer a choice of at least two networks, one of which must be a network other than Visa and Mastercard, over which an electronic credit transaction may be processed.

Visa and Mastercard wield enormous market power in credit cards; according to the Federal Reserve, they account for nearly 576 million cards, or about 83 percent of general-purpose credit cards. Visa’s and Mastercard’s market power and network structure have enabled them to impose fees on U.S. merchants that are among the world’s highest, charging more than $100 billion in U.S. merchant credit card fees in 2023 alone. These fees include interchange fees which Visa and Mastercard require merchants to pay to issuing banks, as well as network fees that Visa and Mastercard require merchants to pay directly to them. Consumers ultimately pay for all of these fees in the price of the goods and services they buy.

While public support grows for Durbin’s push to protect consumers, credit card and airline companies and Wall Street banks continue to try to coordinate a smear campaign against the popular efforts.

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