Credit Card Competition Act of 2023

Floor Speech

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Mr. DURBIN. Mr. President, on a different subject matter completely, I want to explain a bill that I have introduced that is so controversial that when you go to the airport here in Washington, DC, they have billboards flashing about how dangerous this bill is. Let me tell you about the bill.

Most Americans pay for their purchases with credit and debit cards. I know I do. However, most Americans don't know that, when they go to the register to pay or to enter their card information online, there are fees that are being charged when they use their credit cards that are known as swipe fees, or interchange fees. Each time a credit card is used to make a donation to the Red Cross, to purchase groceries, fuel, Christmas gifts, or something else, Visa and MasterCard charge a fee you never see. Some of that fee they keep for themselves; most is given to the bank that issues the credit card.

Today, Visa and MasterCard control around 80 percent of the credit card market in the United States of America--two companies, a duopoly-- wielding enormous power over the American economy. Visa and MasterCard set these interchange fees, or swipe fees, on behalf of thousands of banks, leaving merchants, retailers--many of them just small businesses and restaurants--without a choice but to accept the outrageous fees. There is no negotiation on this fee. There is no competition. Small business owners and consumers face a ``take it or leave it'' choice. In 2022 alone, U.S. merchants and consumers paid $93.2 billion in credit card interchange fees to line the pockets of the biggest banks on Wall Street. That is absolutely unacceptable and unfair, and we can and must do something about it.

That is why I made it a priority to pass my bipartisan Credit Card Competition Act. The legislation, which I introduced with Senators Marshall, Welch, and Vance, would finally bring competition and choice to the credit card market and bring down the excessive credit card fees by requiring only the largest 30 banks in this country to enable at least two credit card networks to be used on the credit cards they issue. It would be provided with at least one network outside the Visa- MasterCard duopoly. My bill is estimated to save merchants, retailers, businesses, and consumers $15 billion every year.

Given this threat to their ability to exorbitantly profit off of consumers and small businesses, it is no surprise that the credit card industry is paying a pretty penny to convince consumers that my bill will take away the credit card rewards programs, like frequent flier miles. In fact, a new report found that Visa, MasterCard, Wall Street, and the industry trade groups they fund, such as the Electronic Payments Coalition, have spent a combined $51 million in lobbying against my bill since 2022.

They also have recruited allies, including some in the airline industry, to breathlessly claim that my bill would make frequent flier rewards programs disappear. United Airlines' CEO Scott Kirby recently said that my bill would ``kill the rewards program.''

Let me be very clear: That is a patently false statement. A recent study found that if my bill were enacted, it would have a negligible impact, at most, on rewards and noted that banks' swipe fees profits provide a more than sufficient margin to maintain a current reward level.

What I have come to find out and what most people would be surprised to hear--and United Airlines is a good example--is that we think of it as an airline that also has credit cards, but when you look at the profit statement for United Airlines, it turns out it is a credit card company that happens to own some airplanes. That is a fact. More profits are made by United Airlines off their credit card than their flight operations. Think about that for a second. All the planes and all the schedules and all the people who work don't generate the same level of profit as their credit cards from these interchange fees.

So you say to yourself: Well, the credit card companies that are offering all of these special programs, if they make less money, they will provide fewer programs.

Well, let's take a look across the pond at Europe for comparison.

In 2015, the European Union capped credit interchange fees at 0.3 percent compared to the U.S.'s rates for United Airlines and others--a U.S. rate between 2 to 3 percent. Compare that 2 to 3 percent to 0.3 percent, and you say to yourself: Well, surely, they don't offer the frequent flier programs in Europe if they have so dramatically cut this interchange fee. But major European airlines still offer co-branded credit cards and frequent flier programs that are comparable to, if not better than, anything offered in the United States.

Moreover, this past July, Forbes magazine published an article saying that compared to other nations, the airline rewards program in the United States has made it more challenging to earn and redeem miles. I am going to be taking a look at these frequent flier programs now that United Airlines wants to make such a to-do about it. I think we have got to make sure that the American consumers are getting what they think they are getting.

So let me repeat: My bill is not coming after your airline rewards programs or any other program, and any effort by the airline industry or big banks to convince you otherwise is just a scare tactic. They are feigning concern for hard-working Americans to protect their bottom line.

Since I introduced the bill, those who oppose it have falsely claimed the legislation would hurt unions and benefit billionaires. What a claim. Just a few weeks ago, multiple unions, including the International Brotherhood of Teamsters and the Service Employees International Union, endorsed my Credit Card Competition bill.

The Teamsters' general president, Sean O'Brien, said:

Union members and American families cannot afford to sacrifice so much of their hard-earned wages to predatory and consolidated credit card corporations trying to skim every last dollar they can from vulnerable consumers.

That is exactly the problem this legislation was introduced to fix.

And just before Thanksgiving, a diverse group of organizations representing workers, small businesses, and competition advocates launched the Lower Credit Card Fees Coalition, urging Congress to pass my Credit Card Competition Act.

Few things could unite unions, businesses, consumer groups, and a bipartisan group of Senators. This bill does just that because it will benefit hard-working Americans.

Far from threatening rewards programs or hurting workers, the bill will benefit Americans who currently are paying the price for the credit card industry's price-gouging schemes. It will give a fighting chance to small businesses and restaurants that we want to see stay open; support the mom-and-pop shops that make our communities feel whole; and, ultimately, keep money in the pockets of hard-working Americans. It is time we bring this commonsense, consumer-protecting bipartisan legislation to the floor for a vote.

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