“For too long MasterCard and Visa, each with market power in the card payment markets derived from decades of collusive conduct by the nation’s largest banks, have used their market power to force merchants to pay them and their bank members outrageous sums of money which inevitably get charged to all consumers (including those who pay with cash, checks or government-funded welfare programs). And, as demonstrated by the hard lessons we have learned in the last few years, it is dangerous to blindly trust these financial institutions to make sound judgments and to treat their customers fairly. Congress must intervene.”
“But today’s payment card markets are not free and competitive; they are broken. MasterCard and Visa in the United were created, and were owned and controlled for a very long time, by the country’s biggest banks, which operated them as a cartel. Once the banks convinced nearly all merchants to accept their cards, they were able to dictate terms and prices to merchants because the dominance of these brands makes it virtually impossible for a merchant to reject them and survive. It would be like refusing to accept U.S. currency.” pages 4-5
(Albert A. Foer, “Electronic Payment Systems and Interchange Fees: Breaking the Log Jam on Solutions to Market Power,” The American Antitrust Institute, 3/4/10)
Numerous studies have been conducted by federal agencies, the GAO, academics and the Federal Reserve, each one each identified market problems caused by swipe fees. Now some in Congress want to undo the meaningful reforms past a year ago, proposing instead to conduct yet another study. With relief just three months away, Congress should stand up for small businesses and consumers and leave swipe fee reform alone!
For a summary of the many reports, studies and expert commentary related to swipe fee reform visit http://www.unfaircreditcardfees.com/testimony-reports