Critics from the government watchdog argue that the Visa-Mastercard duopoly burdens businesses and customers with high fees.

Government watchdog Accountable.US released a new report on credit card competition revealing that Visa and Mastercard, along with industry trade groups, have spent $21 million in the first half of 2024 to lobby against the Credit Card Competition Act.

Fresh data complements a 2023 analysis which showed that the same coalition spent $51 million to create market monopoly, or rather duopoly, bringing the total lobbying spend to $80 million.

The organization representatives argue that, despite the payment giants’ claims about the harm of increased competition in the field, a lack of competition is burdening small business owners and their customers with sky-high swipe fees. According to the press release, the existing sector duopoly makes swipe fees in the US ten times higher than those in Europe and enables their constant growth. Namely, the watchdog claims that the given fees have more than doubled over the last decade.

The Credit Card Competition Act, supported by bipartisan lawmakers, aims to introduce more competition in the credit card market, reduce swipe fees, and improve security for consumers and businesses. It?requires banks issuing credit cards to support multiple payment networks. It is supposed to give merchants more alternatives and eventually reduce service costs for the end users.

The US is not the only country in the world preoccupied with the Visa-Mastercard duopoly and the fee burden it places on individuals and businesses.

Back in 2018, the European Commission voiced?competition concerns relating to Mastercard and Visa inter-regional interchange fees for payment card transactions. To address that, Mastercard and Visa have separately decided to offer commitments that would reduce the inter-regional multilateral interchange fees (MIFs) by at least 40%.

In 2023, the UK regulator proposed a cap on cross-border interchange fees charged by Visa and Mastercard. The two companies?significantly raised some of these fees in 2021 and 2022. Therefore, Britain’s Payment Systems Regulator (PSR) has been examining the fee levels and their rationality and concluded that Mastercard and Visa have likely raised these fees to an unjustified level, largely at the expense of UK businesses. The regulator estimated that UK businesses paid an extra ￡150-200 million in 2022 due to the fee increases.

Separate companies and organisations, like Block or Commercial and Interregional Card Claims (CICC), have also filed antitrust lawsuits against Visa and Mastercard.

Thus, Block fintech stated that the two payment giants vastly overcharged the Square payment platform and artificially inflated so-called swipe fees, resulting in increased retail expenses for end consumers.

CICC accused Visa and Mastercard of charging sellers excessive fees for multilateral exchange. The firm initiated a class action on behalf of the merchants. However, its lawsuits were eventually suspended by the UK tribunal.

Another lawsuit initiated by British law firm Harcus Parker aimed to prove that Visa and Mastercard determine the number of exchange fees, focusing not on market circumstances, but on their benefit contrary to objective factors.

Just a few days ago, Visa also faced an antitrust lawsuit over monopolizing the debit card market. This one was filed by the US Justice Department (DOJ). It alleges?the company uses its market power to stifle competition and keep fees artificially high.