03.21.24

In Speech on Senate Floor, Durbin Calls Out CEOs of Visa, Mastercard, United & American Airlines for Balking at Invitation to Testify Before Judiciary Committee on Credit Card Competition

WASHINGTON – In a speech on the Senate floor today, U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, called out the CEOs of Visa, Mastercard, United Airlines, and American Airlines forbalking at his invitation to testify at a public hearing regarding competition in the credit card market and Durbin’s Credit Card Competition Act.  During his speech, Durbin made clear that if the CEOs are willing to discuss the Credit Card Competition Act—legislation that would enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly—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.

Durbin invited Ryan McInerney, CEO of Visa; Michael Miebach, CEO of Mastercard; Scott Kirby, CEO of United Airlines; and Robert Isom, CEO of American Airlines, to testify via letters sent on February 12.

“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’ve 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,” Durbin said. “For credit card transactions, interchange fees are much higher [than debit card transactions], in the range of two to three 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 that you used to pay for the meal.  It 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.”

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.  U.S. Senators Peter Welch (D-VT), J.D. Vance (R-OH), Jack Reed (D-RI), and Josh Hawley (R-MO) are cosponsors of the legislation, which is estimated to save merchants and consumers $15 billion each year.

“Thankfully there is an answer and 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 strong hold,” said Durbin.  “By forcing Visa and Mastercard to actually compete for merchants’ business, we’re aiming to end the cycle of increasing interchange fees that’s breaking the backs of small businesses.  And 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’s $15 billion a year coming out of the pockets of Wall Street banks and into the pockets of American consumers.  That’s why 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.”

Durbin continued, “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, if you think of a major airline like United Airlines, it’s basically a credit card company that owns some planes.  That’s why anyone who has traveled through the airport here in D.C., watched TV, or used the internet has probably seen ads claiming, ‘Dick Durbin wants to take away your credit card rewards.’  The problem is these breathless claims are false.  Rewards programs will be alive and well long after the Credit Card Competition Act becomes law.”

Durbin went on to push back on these false claims against theCCCA.  A recent study found that if the bill was enacted, it would have a negligible impact, at most, on rewards, and noted that banks’ swipe fee profits provide a more than sufficient margin to maintain current reward levels. 

In 2015, the EU capped credit interchange fees at 0.3 percent—compared to the current U.S. rate between two to three percent.  But major European airlines still offer co-branded credit cards and frequent flyer programs that are comparable, if not better, than the ones offered by U.S. airlines.  Moreover, this past July, Forbes published an article saying that compared to other nations, airline rewards programs in the U.S. have made it more challenging to earn and redeem miles.

“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… That’s 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’re just too darned busy to come and explain the major source of profits for their businesses.  They’re too darned busy to come and explain what they’re doing to consumers and families across America.”

Durbin concluded, “Killing the Credit Card Competition Acthas been and remains a top priority for these companies, as evidenced by more than $51 million lobbying effort they’ve undertaken against my bill… 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 forsmall 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.”

Video of Durbin’s remarks on the Senate floor is available here.

Audio of Durbin’s remarks on the Senate floor is available here.

Footage of Durbin’s remarks on the Senate floor is available here for TV Stations.

Visa and Mastercard wield enormous market power in credit cards; according to the Federal Reserve, they account fornearly 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 a total of $93 billion in U.S. merchant credit card fees in 2022.   These fees include interchange or swipe 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.  Interchange fees are the second largest cost for many small businesses—only behind labor costs.

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