Mastercard Tells Congress Credit Card Competition Act Is Bad for Consumers, Businesses

Mastercard has written a letter to several members of the United States Congress, outlining its opposition to the Credit Card Competition Act. 

The legislation would “remove consumer choice, erode security, eliminate rewards and prevent small businesses from investing in their future,” the company said in a Friday (Sept. 22) press release. 

The Credit Card Competition Act would mandate banks to enable card payments to be routed over at least one network that competes with Mastercard and Visa, PYMNTS reported in June. 

Proponents say the legislation would give merchants a greater range of choice, because they would have the option to embrace networks with cheaper fees, including interchange (or “swipe”) fees, than those seen with Mastercard and Visa, which together account for 80% of the credit card market. The merchants would pass those savings on to consumers, according to those who advocate the bill. 

In its letter dated Wednesday (Sept. 20), Mastercard said the payments industry has never been more competitive. Consumers and businesses can use — and Mastercard must compete with — cash; checks; global and regional networks; buy now, pay later (BNPL) providers; person-to-person and account-to-account services; real-time payments platforms; digital currencies; wallet providers; and open banking companies. 

“The variety of payment options available to American consumers is robust,” Mastercard said in the letter. 

The company added in the letter that the Credit Card Competition Act would put at risk the benefits consumers gain from electronic payments, including access to credit, float, zero liability, rewards and fraud protection. Regulation would increase their costs and therefore reduce access to these benefits. 

Businesses, too, benefit from electronic payments, the letter said. For example, they gain increased sales, operational savings and guaranteed payments. 

“Many merchants, including several who have publicly opposed this legislation, leverage payments products to fuel their loyalty programs,” Mastercard said in the letter. “Without these programs, their profitability would suffer, and they would be unable to offer value to consumers.” 

Mastercard’s letter was addressed to seven lawmakers who had sent the company a letter a week earlier, on Sept. 13, calling for “competition in the payment processing industry” and accusing Mastercard and Visa of “duopolistic control and heavy-handed market practices.”