Since it's the holiday shopping season, credit card usage is likely to increase. And every time you swipe, you incur transaction fees. The fee is often paid by the retailer and may be passed on to the customer. A group of lawmakers is aiming to lower these transaction fees. Retailers currently pay about 2% to 3% per transaction, which will total $224 billion by 2023, according to industry analyst CMSPI. Visa and Mastercard, the two payment networks that dominate the market, say they are paid fees for valuable services for fast and secure transactions. Senate Judiciary Committee Chairman Dick Durbin (D-Ill.) said this is a problem that pervades every company that accepts cards. “We're not negotiating. They decide how much to charge.” Durbin said. Mr. Durbin, who is promoting the Credit Card Competition Act, advocates for more competition in the credit card market so that companies can participate in rate negotiations. “If we cut costs for retailers, whether it's restaurants or shops, that's the end of retailers,” Durbin said. “We're looking at passing that on and lowering prices for our customers.” Ta. But payments bodies argue that there are already many payment options available, which is driving competition. “Cash, checks, Venmo, Zelle, credit cards, debit cards, the list goes on and on,” said Richard Hunt of the Electronic Payments Coalition. “Millions of Americans use their credit cards multiple times throughout the day. Credit cards are safe, secure, and extremely valuable for making ends meet,” Hunt said. It says it's paid for and protects businesses and customers alike from fraud and information theft. He said discontinuing the service would not only put personal information at risk, but could also take away the perks customers relied on, such as points and cashback, leaving them with no choice but to use that money to pay for groceries or gas. He said he would like the money to be used to pay his bills and buy gifts during the holidays. However, Sen. Durbin believes increased competition will not hurt rewards programs, which he says are a key factor in attracting customers to apply for credit cards in the first place. Earlier this year, Visa and Mastercard settled a lawsuit over fees, resulting in lower costs in the coming years and the ability for small merchants to collectively bargain for better rates. At a Senate Judiciary Committee hearing last week, both Republicans and Democrats questioned Visa and Mastercard's profit margins. That share has hovered around 50%, supported in part by fees. Lawmakers argued that such high profit margins should not exist amid record credit card debt. Representatives from Visa and Mastercard have argued that the fees provide security from fraud, promote innovative payment technology, and provide a lifeline to customers, especially those on low incomes. defended. -Depends on income, points and perks. Durbin acknowledged that the bill is unlikely to pass in the current lame-duck Congress, but noted there is bipartisan interest in the proposal.
Since it's the holiday shopping season, credit card usage is likely to increase. And every time you swipe, you incur transaction fees. The fee is often paid by the retailer and may be passed on to the customer.
A group of lawmakers is aiming to lower these transaction fees. Retailers currently pay about 2% to 3% per transaction, which will total $224 billion by 2023, according to industry analysts. CMSPI. Visa and Mastercard, the two payment networks that dominate the market, say they are paid fees for valuable services for fast and secure transactions.
Senate Judiciary Committee Chairman Dick Durbin (D-Ill.) says this is a problem that pervades every business that accepts cards.
“Visa and Mastercard don't negotiate fees on every bill; they decide how much to charge,” Durbin said.
Mr. Durbin, who is promoting the Credit Card Competition Act, advocates for more competition in the credit card market so that companies can participate in rate negotiations.
“When you cut costs for a retailer, whether it's a restaurant or a shop, you end up passing those costs on to lower prices for your customers,” Durbin said.
However, payments bodies argue that there are already many payment options available, which is driving competition.
“Cash, checks, Venmo, Zelle, credit cards, debit cards, the list goes on and on,” said Richard Hunt of the Electronic Payments Coalition. “Millions of Americans use their credit cards multiple times throughout the day. It's safe, secure, and extremely valuable for making ends meet.”
Hunt says that cost pays for the service, which protects businesses and customers alike from fraud and stolen information. He said discontinuing the service would not only put personal information at risk, but could also take away benefits customers relied on, such as rewards points and cash back.
”[Customers] Use that money to pay for groceries, gas, and buy gifts for the holidays. This move by Congress would put these reward points at risk,” Hunt said.
But Sen. Durbin believes increased competition won't hurt rewards programs, which he says are an important part of attracting customers and getting them to apply for credit cards in the first place.
Visa and Mastercard settled a lawsuit over fees earlier this year, lowering costs for years to come and allowing smaller merchants to bargain collectively and get better rates.
At a Senate Judiciary Committee hearing last week, both Republicans and Democrats questioned the fact that Visa and MasterCard's profit margins hover around 50%, supported in part by fees. Lawmakers argued that such high profit margins should not exist at a time when credit card debt is at record high levels.
Representatives from Visa and Mastercard defended the fees, saying they provide security from fraud, promote innovative payment technology, and provide a lifeline to customers who rely on points and rewards, especially low-income earners. He said that
Sen. Durbin acknowledges that the bill is unlikely to pass in the current lame-duck Congress, but notes there is bipartisan interest in the proposal.
