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Senate Bill Takes Aim at Visa, Mastercard Credit-Card Fees


Most U.S. banks that issue credit cards pair up with one of the two major networks, Visa or Mastercard.
Photo: Bloomberg

Two U.S. senators are preparing legislation that would give merchants power to process many
Visa Inc.
Mastercard Inc.
credit cards over different networks.

The bill, which could be introduced as soon as this week, aims to create more competition among U.S. credit-card networks, a sector where Visa and Mastercard have long dominated. Sen. Dick Durbin, an Illinois Democrat, and Sen. Roger Marshall, a Kansas Republican, are expected to introduce the bill.

Mr. Marshall said banks and major card networks lobbied his office to not sign onto the bill. He decided to move forward after hearing from a growing number of merchants, including small businesses, restaurants, gas stations and convenience stores, about the toll of the rising credit-card fees set by Visa and Mastercard that are often pocketed by large banks.

Mr. Durbin spearheaded a similar rule for debit cards over a decade ago. The Durbin amendment, part of the 2010 Dodd-Frank law, requires that merchants have the ability to choose from at least two unaffiliated debit-card networks when routing transactions.

Most shoppers don’t think twice about how their payments are processed when they buy something with a credit card. But the underlying plumbing and its associated fees represent a fierce source of contention between merchants that pay the fees and big card networks and banks that set or collect them. The expected bill reflects a growing scrutiny of the payments sector.

Once the bill is introduced, the Senate parliamentarian would decide which committee it goes through, according to people familiar with the matter. Because the bill would amend the Electronic Fund Transfer Act, it would likely be referred to the Senate Banking Committee, the people said. Neither Mr. Durbin nor Mr. Marshall is on the banking committee.

Rep. Peter Welch of Vermont plans to be the lead Democrat on a House bill, according to a person familiar with the matter. It couldn’t be determined if a House bill would have a Republican co-lead and if it would get introduced without one.

Most U.S. banks that issue credit cards pair up with one of the two major networks, Visa or Mastercard. The network is typically listed on the front or back of the card. When a person uses a credit card at, say, a department store, the store has to pay card-related fees, including a so-called interchange fee to the card issuer and a network fee to Visa or Mastercard.

The networks set these fees and say they are important because they help cover costs for things like innovation and preventing fraud. Credit cards can also encourage consumers to buy more, networks say.

Representatives for Visa, Mastercard and the Electronic Payments Coalition, which represents card issuers and networks, didn’t immediately have a comment.

When a consumer pays with a credit card that has Visa or Mastercard listed on it, merchants generally have to route the payment through that network.

The bill would mandate that merchants in many cases have the right to route payments through an unaffiliated network. This would apply on Visa or Mastercard credit cards that are issued by banks with more than $100 billion in assets.

The Merchants Payments Coalition, which represents merchant trade groups and lobbied for the bill, says merchants should have the choice to send credit-card payments over networks that set lower fees.

Visa and Mastercard handled roughly 77% of all general-purpose credit-card spending last year that occurred on cards issued in the U.S., according to the Nilson Report, a trade publication.

Write to AnnaMaria Andriotis at

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