The news: Retail titans Walmart and Target put their clout behind a letter signed by more than 1,600 merchants urging lawmakers to pass a bipartisan bill designed to lower credit card swipe fees, per the Wall Street Journal. The letter was sent to every member of Congress.
Durbin 2.0: The bill, introduced in July by Senate Majority Whip Dick Durbin and cosponsored by Republican Sen. Roger Marshall, would force large banks to offer at least two alternative credit card networks other than Visa and Mastercard.
The bill mirrors Durbin’s amendment to the 2010 Dodd-Frank Act, which reformed debit card transactions in the wake of the financial crisis.
The backlash: Payments companies and financial trade groups wasted no time mobilizing an offensive against the bill.
Don’t panic: The volume of breath and ink spent in defense or critique of this bill is at best disproportionate to its chances of surviving in the months—or even years—ahead.
The big takeaway: Payment firms are losing sleep over this bill because it represents a clear and present threat to one of the mainstays of the business. The complicated relationship between fees from retailers to banks and from banks to networks has helped make Visa and Mastercard two of the most profitable companies in the world. But barring another credit crisis, the headwinds bearing down on this bill could keep it in committee indefinitely.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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