In a world where plastic rules, the power play between US Senators and credit card giants Visa and Mastercard is heating up. As is their want, a group of Senators are “demanding answers” and slamming fee increases that could cost American businesses $502 million annually. Are the card giants playing hardball at the expense of hard-working Americans? Or are the Senators just gaining easy political capital?

Mastercard and Visa under fire

Senator Roger Marshall has taken the reins in this high-stakes game. Alongside Senate Majority Whip Dick Durbin and Senator Peter Welch, Marshall, and four House Representatives, fired off a letter to Visa and Mastercard, demanding an immediate about-face on their impending credit card swipe fee hikes.

These fee increases, set to roll out this fall, have raised eyebrows. If they proceed, American businesses and merchants could be left holding the bag to the tune of $502 million each year. It's a real hit for the economy, and the Senators are not having it.

Credit Card Competition Act

In June, Senators Marshall, Durbin, J.D. Vance, and Peter Welch dropped a bombshell in the form of the bipartisan Credit Card Competition Act (CCCA), the original overview of which can be read here. The goal? To inject some much-needed competition into the credit card industry and put an end to Visa and Mastercard's duopoly. It's their way of giving the little guys a fighting chance and who doesn’t love that?

The letter is part of a long running battle between the politicians and the card companies:

Senators Dick Durbin, a Democrat, and Roger Marshall, a Republican, urge Visa and Mastercard to cancel plan to raise swipe fees https://t.co/FioHCeBLDC

— Bloomberg (@business) August 30, 2023

The CCCA proposes a simple solution – It would mandate a second routing option be offered to merchants. This simple fix would force the major credit card companies to compete and give some power back to merchants who would finally have the option to choose other networks and fairer fees.

The Senators are not pulling punches, accusing Visa and Mastercard of profiteering while ordinary Americans bear the brunt of their actions. In a world grappling with rising costs for essentials like fuel and groceries, hiking credit card fees feels like rubbing salt in the wound. The Senators argue that American families and small businesses have shouldered the burden for far too long.

As the battle unfolds, Visa and Mastercard find themselves in the hot seat, facing off against a determined group of Senators. Will these card giants reverse their fee hikes, or will they dig in their heels? Only time will tell, but one thing's for sure—the showdown is far from over.