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May 23, 2022  •  Issue 22:05:02

                            Lawmakers eye fixes for



                                 ‘broken’ card system





                                                               weighted average that works out to about 0.5 percent for
                                                               credit cards and 8 cents for debit cards.
                                                               "The credit card system is broken," Doug Kantor, general
                                                               counsel at the National Association of Convenience Stores,
                                                               said in remarks to the panel. "We need competition in the
                                                               market. That's the bottom line."

                                                               Durbin, architect of the 2010 legislation that ushered in
                                                               debit interchange caps, agreed. And he made a thinly
                                                               veiled threat to regulate credit card interchange. "Let's
                                                               reduce inflationary pressure by preventing network swipe
                                                               fees from being jacked up to unreasonable levels," he said.

                                                               It was just one of six proposals Durbin said would "limit
                                                               Visa and Mastercard fee fixing." Additionally, he called for:
        By Patti Murphy                                             • Requiring issuers to detail on monthly cardholder
                 enator Richard Durbin is on a warpath over ris-      statements the interchange assessed on each listed
                 ing interchange rates and Visa and Mastercard        transaction;
                 rules he believes stymie competition. The Illinois   • Eliminating interchange assessments on the tax por-
        S Democrat called executives from Visa and                    tion of card payments;
        Mastercard before the Senate Judiciary Committee, which
        he chairs, on May 4, 2022, to protest recent interchange    • Allowing merchants to choose which card network
        increases. And he offered proposals to loosen the strong-     processes each in-person and card-not-present
        hold the two companies have on credit and debit card          transaction;
        networks.
                                                                    • Reshaping the card security standards-setting ap-
        "Interchange is designed to avoid competitive market          paratus, currently run by Visa and Mastercard, by
        pressures," Sen. Durbin remarked. "Banks get the fees, but    requiring the inclusion of outside security experts.
        banks do not set the fees. Instead, the banks let Visa and
        Mastercard set the fees on their behalf. This means that all
        banks in the network are guaranteed the same interchange
        fees regardless of how efficient the bank is in running its   Contributed articles inside by:
        card operation, or in preventing fraud. It's a gravy train."
                                                                 Natasa Cvijanovic .................................................................................28
        Durbin then added that other countries have figured this   Ken Musante  .........................................................................................30
        out. Regulators in Canada capped Visa and Mastercard
        interchange at 1.5 percent; in the European Union, credit   Sherrie Bryant ........................................................................................32
        card interchange is capped at 0.3 percent and debit card   TOC on page 3
        interchange can't exceed 0.2 percent; Australia uses a


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