WASHINGTON — A bill that aims to reduce the largest payment networks' leverage on swipe fees could get new life after the midterm elections come to a close.
The legislation, spearheaded by Sens. Richard Durbin, D-Ill., and Roger Marshall, R-Kan., would require large banks to allow credit card transactions to occur on at least two unaffiliated networks. One of them would have to be a smaller network, rather than Visa or Mastercard. The House has also introduced companion legislation.
The bill was originally
While an aide on the Senate Judiciary Committee, which is helmed by Durbin, cautioned that it's still unclear whether the NDAA will allow the amendment to be attached, they expect to push to have the legislation included in either the NDAA or a funding bill before the new Congress is sworn in. The aide said that the number of amendments that will be attached to must-pass pieces of legislation can vary widely.
Although the NDAA is still the primary method of getting the amendment through, the aide said, an appropriations bill could also provide another vehicle for riders, including the credit card legislation.
"Congress could pass an appropriations package but that will ultimately depend on the results of the election," said Andrew Olmem, a partner in Mayer Brown's Washington office and former deputy director of the U.S. National Economic Council under former President Donald Trump, and Republican chief counsel for the Senate Banking Committee. "Even if it does so, only policy riders with strong bipartisan support would have a chance at being included, as there won't be votes to spare."
A few factors make the timing of passing the amendment into law more urgent. The results of the 2022 midterms could change the political calculus of getting the amendment passed.
Although the bill is cosponsored by lawmakers of each party, fierce opposition from the banking industry would make the bill more difficult to pass in a Republican-controlled Senate or House. If either chamber flips, Senate leadership might allow more riders to be attached to must-pass legislation before Republicans set the agenda in the new year.
Rising concerns about inflation are also spurring lawmakers to consider the swipe fee legislation before Republicans wrest control of either chamber after the 2022 midterms. Swipe fees rise with inflation, padding the bottom lines of both Visa and Mastercard. Some banks also rely on the fees for a significant share of their profit, making it an effective hedge against inflation while other business lines become less profitable.
"When prices go up, swipe fees revenue goes up," said Ed Mierzwinski, senior director of U.S. PIRG's federal consumer program. "If prices were to double, swipe fee revenue would double."
Retailers, meanwhile, build those fees into the prices of their products, Mierzwinski said. So all consumers are paying higher prices based on swipe fees, he said, not just those using credit cards.
The amendment is facing a steep uphill battle to win over industry opponents, however. The Electronic Payments Coalition, whose members include the largest banking and credit union trade associations as well as banks and card issuers, and other financial industry groups argue that the bill will kill credit card rewards programs and shift profits to retailers rather than saving money for consumers.
Jeff Tassey, board chairman of the Electronic Payments Coalition, called the effort to tie the amendment to the NDAA, and by doing so highlighting interchange fees paid by veterans, a "Trojan Horse."
"Using our nation's veterans as pawns is a cynical political ploy that should be resoundingly rejected by Congressional lawmakers," he said in a statement.
On the flip side, retailers largely support the bill, with their trade groups saying that small businesses pay large fees to credit card companies, and that this would reduce those fees. National Association of Convenience Stores General Counsel Doug Kantor said that he expects legislators to try and pass the amendment during the lame-duck session, but how successful they are depends on the results of the election.
"There's a bit of a wait-and-see on any kind of possible party, depending on what happens with congressional leadership," he said.
