- Mastercard, the second-largest card network in the U.S., wrote a letter last Wednesday to congressional lawmakers, reiterating a prior denial of reports that it is planning to raise interchange fees this fall and asserting that the credit card industry “has never been more competitive.”
- The Purchase, New York-based company said it has invested over $7 billion in the past five years to prevent fraud. “In the past 12 months, more than $20 billion in fraud was prevented,” Mastercard’s executive vice president for public policy, Tucker Foote, wrote in the letter.
- The letter specifically calls out the Credit Card Competition Act, a bipartisan bill championed by Democratic Sen. Dick Durbin of Illinois. The CCCA would “remove consumer choice, erode security, eliminate rewards, and dramatically prevent small businesses from investing in their future,” Mastercard said in the letter.
The Wall Street Journal reported on August 30 that Mastercard and its larger network rival Visa were planning to raise the fees they charge merchants, such as retailers and restaurants, to accept credit cards as a form of payment from customers.
Both companies previously pushed back on the Journal’s report, but the story still prompted Durbin and other lawmakers in Washington to write a letter to Visa CEO Ryan McInerney and Mastercard CEO Michael Miebach. That letter, dated Sept. 13, called on the CEOs to halt any plans to raise fees, warning that any increase would “provide further evidence of a broken market” which the lawmakers aim to fix with the CCCA. It also requested a response from both CEOs by September 29.
The CCCA is expected to come up for a vote by the end of the year according to the office of Kansas Republican Sen. Roger Marshall.
Nonetheless, Baird Senior Research Analyst David Koning and his colleague at the financial services firm, Senior Research Associate Robert Bamberger said the legislation was “unlikely to go through,” in light of the concerns Mastercard outlined in its letter.