Durbin lauds state taking swipe at credit-card companies
Chronicle Media — May 30, 2024![](https://chronicleillinois.com/wp-content/uploads/2024/05/illinois-060524-durbin-budget-photo-300x200.jpeg)
U.S. Senate Majority Whip Dick Durbin, D-Springfield, said Illinois lawmakers did a good thing in passing a budget that limits swipe fees that credit-card companies can charge businesses. (Photo courtesy of Durbin’s office)
U.S. Senate Majority Whip Dick Durbin, D-Springfield, applauded the Illinois Legislature’s passage of a state budget that included the Interchange Fee Prohibition Act.
The legislation, which—like Durbin’s Credit Card Competition Act—aims to curb the swipe fees on electronic transactions, prohibiting credit-card companies and financial institutions from charging merchants interchange fees on sales and excise taxes, as well as gratuities, added to electronic transactions. The bill also bars credit-card companies from increasing their interchange fees to offset the amount saved by merchants under the terms of the bill.
“The Illinois state legislature took a major step forward in pushing back against the swipe fees that are charged by credit-card companies—fees that are nonnegotiable for merchants and that big banks use to pad their already high profits,” Durbin said. “I’m encouraged to see the Interchange Fee Prohibition Act included in the state’s final budget, and I applaud our state leaders for working to bring down costs and eliminate fees that are pla;uing every electronic transaction in Illinois.”
“Now the federal government should take a page out of Illinois’ book,” Durbin added. ”My bipartisan Credit Card Competition Act would benefit consumers and prevent the Visa-Mastercard duopoly from employing its unfair price-gouging tactics that disproportionally hurt American families and small businesses. We must keep fighting for consumers and small-business owners across America who are asking for economic fairness.”
Durbin said his Credit Card Competition Act of 2023 would enhance competition and choice in the credit-card network market, which is dominated by the Visa-Mastercard duopoly. Building off debit-card competition reforms enacted by Congress in 2010, the bill would direct the Federal Reserve to ensure that the largest credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed. The legislation is estimated to save merchants and consumers $15 billion each year.
Visa and Mastercard, according to the Federal Reserve, account for nearly 576 million cards or about 83 percent of general-purpose credit cards. Visa 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. The 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 the fees in the price of the goods and services they buy, Durbin noted.