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Mastercard has issued a letter to multiple members of the United States Congress, outlining its objections to the proposed Credit Card Competition Act.
In a press release on Friday (September 22, 2023), the company stated that the legislation would “restrict consumer choice, diminish security, eliminate rewards, and hinder small businesses from making future investments.”
Proponents of the bill argue that it would provide merchants with a broader array of choices, allowing them to adopt networks with lower fees, including interchange fees, compared to those associated with Mastercard and Visa. Together, these two companies command 80% of the credit card market. Advocates believe the resulting cost savings would benefit consumers.
In a letter dated Wednesday (September 20, 2023), Mastercard countered by asserting that the payments industry has never been more competitive. It highlighted the numerous options available to consumers and businesses, ranging from cash, checks, and global and regional networks to buy now, pay later (BNPL) providers, person-to-person and account-to-account services, real-time payment platforms, digital currencies, wallet providers, and open banking entities.
Mastercard emphasized the robust variety of payment options accessible to American consumers.
The company also expressed concerns in its letter that the Credit Card Competition Act would jeopardize the advantages that consumers derive from electronic payments. These benefits include access to credit, float, zero liability, rewards, and fraud protection. Regulation, it argued, would elevate costs and, consequently, diminish access to these benefits.
Businesses also stand to benefit from electronic payments, as they experience increased sales, operational cost savings, and assured payments. Additionally, the letter stated that several merchants, including some who have publicly opposed the legislation, leverage payment products to support their loyalty programs. Without these programs, their profitability would suffer, and they would be unable to provide value to consumers.
Mastercard’s letter was addressed to seven lawmakers who had sent the company a letter on September 13, calling for “competition in the payment processing industry” and accusing Mastercard and Visa of maintaining “duopolistic control and heavy-handed market practices.”
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