Lawmakers are taking another stab at regulating the power of the card giants, and that’s weighing on shares of Visa Inc. and Mastercard Inc. Wednesday even amid some doubts that the newest efforts will succeed.
A group of senators announced Wednesday that they were reintroducing legislation that would require merchants to get a choice of at least two routing networks when consumers pay by credit card. One of those would have to be outside the top two networks.
While there are greater routing and card-fee regulations on debit cards, lawmakers have thus far had less success on the credit-card front.
“Bringing real competition to credit-card networks will help reduce swipe fees and hold down costs for Main-Street merchants and their customers,” said Sen. Dick Durbin, an Illinois Democrat and one of the bill’s Senate sponsors.
The latest proposed Senate legislation — introduced by Durbin; Sen. Roger Marshall, a Kansas Republican; Sen. Peter Welch, a Vermont Democrat; and Sen. J.D. Vance, an Ohio Republican — mirrored an attempt made by a smaller subset of that group during the prior Congress that failed to go anywhere. Members of the House of Representatives appear to be taking up the initiative as well.
See also: What possible credit-card legislation could mean for Visa, Mastercard — and you (from 2022)
Visa’s shares
V,
were off 2.2% as of around midday Wednesday, while Mastercard’s stock
MA,
was off 2.4%. Both names pared losses late in the morning’s trading action.
“Despite vigorous lobbying from Walmart and Target, this ‘Big-box Bill’ was deeply unpopular legislation when it was introduced last year—among both Democrats and Republicans,” Aaron Stetter said in a Tuesday statement ahead of the official introduction. Stetter is the executive director of the Electronic Payments Coalition, which counts Visa and Mastercard as members.
He said that the bill “would hurt consumers by increasing costs, weakening payment security, harming small financial institutions, reducing access to credit for those who need it the most, and ending popular credit card rewards programs.”
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Retail groups, meanwhile, supported the endeavor.
“Skyrocketing swipe fees have been driving up prices for consumers for far too long, and we are confident this is the year Congress is going to say it’s time for that to stop,” Stephanie Martz, the National Retail Federation’s chief administrative officer, said in a Wednesday release. “Competition will bring these fees under control and strengthen security at the same time.”
Mike Beal, the chief financial of family-owned grocery Ball Foods, said that “small businesses pay the highest swipe fee rates, we don’t have the resources to navigate complex credit card contracts, and we have absolutely no leverage to negotiate as these fees rise higher every year,” according to a release from the Merchants Payments Coalition.
But numerous analysts were skeptical that the legislation would gain traction.
TD Cowen’s Jaret Seiberg put it simply: “We do not expect this bill to become law.”
“Interchange is politically toxic,” he continued. “It pits big banks against small merchants and giant merchants against small banks. Leadership in both parties has resisted any effort to reopen debit interchange or to focus on credit interchange. We don’t see that changing as voters do not appear to care about interchange.”
Jefferies analyst Trevor Williams said in note to clients that while this year’s efforts pack “added support” in terms of bipartisan congressional sponsors, his ” contacts in Washington believe the bill faces long odds as standalone legislation (no-win political issue and failed in ’22 despite Democratic majority in House+Sen) and an amendment strategy is unlikely to be viable politically.”
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