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The battle between merchants, on one hand, and financial institutions and payment networks, on the other, over the Credit Card Competition Act continues to heat up. The Merchants Payments Coalition on Thursday sent a letter to Congress signed by nearly 2,000 merchants, including hundreds of small businesses, calling on legislators to pass the CCCA. The latest move follows a similar letter sent to Congress Wednesday from 291 merchant trade associations from every state and Puerto Rico.
The letters are a reminder to Congress, which reconvened this week after adjourning for the holidays, that the bill needs to be voted on before the current session ends early next year, according to an MPC spokesperson.
The letters emphasize that small merchants are actively pushing for passage of the CCCA. Merchants argue the bill, if passed, would help improve their thin margins by instilling more competition in credit card processing. Sellers pay transaction fees—sometimes called swipe fees—each time a customer pays with a credit card.
“While this legislation would benefit all merchants, it is small retailers who are calling for swipe fee reform more than any segment of our industry,” the letter says. “Small retailers have the narrowest profit margins and fewest resources and are hit the hardest by continuing unjustified increases in swipe fees.”
In addition to the lengthy list of merchants signing the letter, processor ACI Worldwide Inc. is a signatory.
The letter goes on to say that Visa Inc. and Mastercard Inc. control more than 80% of the credit card market in the United States, but unlike the case of the debit card market, the two networks “do not have to compete with any other service provider for merchant business.”
As a result, weak or non-existent competition among card credit card networks “drives up prices for merchants and consumers, harms security and strangles innovation,” the letter says.
The CCCA would require financial institutions with $100 billion or more in assets to enable at least one network other than Visa or Mastercard for credit card transaction processing. While banks would choose which networks to enable, it would be merchants that choose which network to use. Advocates expect the bill would create network competition when it comes to swipe fees, security, and service, the MPC says.
“These letters are a reminder to Congress as it reconvenes that as we enter the second year of the current Congress that a vote still has not taken place on the CCCA,” says an MPC spokesperson.
The Electronic Payments Coalition, which is lobbying on behalf of financial institutions and card networks against the CCCA, could not be reached for comment.
