Durbin Schedules Interchange Hearing, Accuses Visa, Mastercard of Misleading Consumers
Senate Judiciary Committee to hold hearing on April 9
Accusing Visa and Mastercard of using false and misleading advertising to oppose his credit card interchange legislation, Senate Judiciary Committee Chairman Dick Durbin, D-Ill., has asked the company CEOs to appear at an April 9 hearing on the bill.
“Visa and Mastercard have aggressively opposed efforts to bring competition to the credit card market in order to protect the dominant market position they share,” Durbin said, in announcing the hearing. “Visa, Mastercard, and its allies have spent millions of dollars opposing my Credit Card Competition Act, including through false and misleading advertising claiming the bill would ‘ban’ credit card rewards programs.”
Durbin noted he had asked the CEOs of the two companies, as well as the CEOs of American Airlines and United Airlines to testify at the hearing. Each company offered other witnesses and not their CEOs. Durbin then sent letters this week formally asking the CEOs to testify, saying that it is “critical” that the committee and the public hear directly from them.
Durbin’s bill, S.1838, would require the federal reserve to issue rules that guaranteed that large credit unions and banks currently using the four-party card processing system be required to use at least one unaffiliated network in addition to VISA and Mastercard.
Merchant groups have said that the legislation would result in more competition in the credit card industry, driving down costs to consumers and businesses that accept credit cards.
Financial trade groups, including America’s Credit Unions, contend that when similar legislation was enacted for debit cards, merchants did not pass on savings to consumers. Airlines have warned that the legislation, if enacted, could result in an end to rewards programs for consumers using their branded credit cards.
“American Airlines and United Airlines have aggressively opposed efforts to bring competition to the credit card market in order to protect the billions of dollars in windfall profits their companies collect through their co-branded credit cards,” Durbin said. “These airlines have become credit card companies that fly planes.”
The Electronic Payments Coalition, which includes credit union and banking trade groups, accused Durbin and co-sponsor Sen. Roger Marshall, R-Kan., of pushing the bill for political gain.
“After failing to deliver a vote, as they promised their supporters last year, Senators Durbin and Marshall are desperate to show some sort of momentum to their political donors while continuing to weaponize the federal government against any business who opposes them,” EPC Executive Chairman Richard Hunt said.
He went on to mock the effort. “This hearing might allow supporters of the bill to say they had a hearing, but the legislation has not gone through regular order and is no more ready for a vote before the Senate than a Supreme Court nominee would be after an appearance before the Senate Banking Committee,” Hunt said.