Durbin is the Senate Democratic whip, the ranking member of the Senate Judiciary Committee and the lead sponsor of the Credit Card Competition Act.
“Reducing the cost of swipe fees and allowing merchants more choice in which cards they accept should be welcome news, however, I believe this settlement falls short,” Durbin said in a Monday press release. “This deal provides only temporary concessions and the ability for Visa and Mastercard to change the rules as they go.”
Visa and Mastercard announced Nov. 10 that they reached a settlement in the “swipe fees” case and that the agreement was awaiting approval by the Eastern District Court of New York.
If approved, the settlement would mark the end of a case that began in 2005 when businesses accused Visa, Mastercard and larger banks of colluding to violate U.S. monopoly laws through the card companies’ collection of interchange fees, also known as “swipe fees,” to process transactions.
Under the agreement, Visa and Mastercard would reduce interchange fees, which are typically set at 2% to 2.5%, by 0.1 percentage points for five years.
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In addition, merchants would be permitted to choose whether they want to accept U.S. cards in certain categories including commercial cards, premium consumer cards including many popular “rewards” cards, as well as standard consumer cards.
The agreement would also cap standard consumer rates at 1.25%, and give merchants more freedom to impose surcharges on credit card users.
Visa said in a Nov. 10 filing with the Securities and Exchange Commission: “The proposed settlement with U.S. merchants of all sizes would provide meaningful relief, more flexibility and options to control how they accept payments from their customers.”
Mastercard said at the time in a statement provided to PYMNTS: “We believe that this is the best resolution for all parties, delivering the clarity, flexibility and consumer protections that were sought in this effort.”
Durbin said in his Monday press release that the Credit Card Competition Act would provide a better solution than the proposed settlement by enhancing competition between credit card networks and ultimately lowering costs for consumers and small businesses.
“My bill would help reduce the swipe fees that are crushing small businesses and costing American families an extra $1,200 each year,” Durbin said.
