The Credit Card Competition Act is Drawing Criticism from Credit Union Trade Groups


A new bill from Senator Richard Durbin (D-IL) introduced in late July is drawing the attention of the credit union industry, and not in a good way.

The Credit Card Competition Act of 2022 (S.4674), also known as the Durbin-Marshall Credit Card Bill, was written with aims from the senator to address the “duopoly” of Visa and MasterCard in credit card processing. Senator Roger Marshall (R-KS) cosponsored the bipartisan bill.

Per a press release from Durbin’s office, the bill “would enhance competition and choice in the credit card network market, which is currently dominated by the Visa-Mastercard duopoly.”

Said Durbin of the present processing environment: “Credit card swipe fees inflate the prices that consumers pay for groceries and gas. It’s time to inject real competition into the credit card network market, which is dominated by the Visa-Mastercard duopoly. This legislation, which builds upon pro-competition reforms Congress enacted in 2010, would give small businesses a meaningful choice when it comes to card networks, and it would enable innovators to gain a foothold in credit cards. Bringing real competition to credit card networks will help reduce swipe fees and hold down costs for Main Street merchants and their customers.”

But credit union and banking groups disagree with Durbin’s assertions.

In a rare instance of cooperation between banks and credit unions, a letter to senators was written opposing the legislation authored by the American Bankers Association, the American Association of Credit Union Leagues, and many more bank associations and credit union leagues besides. In the letter, the unified organizations stated their belief that the legislation would hurt consumers by destroying rewards programs and reduce the number of issuers.

“Far from increasing competition in the credit card marketplace, this legislation will reduce the number of credit card issuers competing for consumers’ business, wring out the competitive differences among card products, decimate card rewards programs (e.g. airline miles) valued by American families and our tourism sector, and put the nation’s private-sector payments system under the micromanagement of the Federal Reserve Board. The Marshall-Durbin bill does all this by using legislation to award private-sector contracts to a small handful of the sponsors’ favored payment networks in order to pad the profits of the largest internet and national merchants who are raising prices on American families far more than the real rate of inflation,” they wrote.

Among the other complaints was a risk to the security of consumer banking information. Said CUNA Deputy Chief Advocacy Officer Jason Stverak, “This bill would allow merchants to bypass established secure payment networks. We strongly oppose it, as it’s a further handout to big box retailers at the expense of consumers.”

Retailers, not surprisingly, have been quick to support the legislation. “By requiring card networks to compete over who gets to process a transaction, exorbitant fees that have skyrocketed could finally be brought in touch with reality,” said the National Association of Convenience Stores and Merchant Payments Coalition. “This is a solution that would let a free, fair, and competitive market determine prices in the payments industry just as it does in virtually every sector of the economy.”

Senator Marshall agreed by indicating that retailers in his home state of Kansas have been victim to Visa and MasterCard’s stranglehold on the market. “It’s gone on long enough. Competition is the heartbeat of capitalism and that is what our bill will create, competition.”

Of the four U.S. credit card networks—Visa, MasterCard, Discover, and American Express—the former two account for approximately 83 percent of general-purpose credit cards, according to the Federal Reserve. In 2021, those two networks resulted in just under $3.5 trillion in transactions, charging $77.48 billion in merchant credit card fees.

The Act “would issue regulations, within one year, ensuring that banks in four-party card systems that have assets of over $100 billion cannot restrict the number of networks on which an electronic credit transaction may be processed to less than two unaffiliated networks, at least one of which must be outside of the top two largest networks.”

Credit unions organization are urging the industry to speak out by contacting House and Senate members about the legislation.


  • Esteban Camargo

    As a supervising editor of CUSO Magazine, Esteban reviews and edits submissions, assists in the development of the publishing calendar, and performs his own research and writing. His experience provides CUSO Mag with a seasoned writer and content curator, able to provide valuable input to contributors, correspondents, and freelance journalists. Esteban has worked at CU*Answers since 2008 and currently serves as the CUSO's content marketing manager.

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