“We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anti-competitive rules, we will accomplish exactly that,” Attorney General Eric Holder said at the time. “The companies put merchants and their customers in a no-win situation.”
And it’s not just the United States’ antitrust laws that Visa and MasterCard break. The European Union’s competition commissioner just won a court case in which MasterCard tried to show its fees didn’t violate the law. The court ruled against MasterCard.
And the credit card fees the EU was concerned about are about eight times lower than fees in the United States. In fact, the court found that consumers get absolutely no benefit from these fees and there don’t need to be any fees at all. That is just the latest in a series of European antitrust probes. Canada’s government just held hearings on the fees, too.
Remarkably, every country that has examined the credit card industry’s practices has found serious problems with it — or hasn’t yet completed its probe. That is a remarkably bad record and shows what is plain to see: The way the industry is structured is fundamentally flawed. It inhibits competition and hurts businesses, consumers and economies.
In the United States, more than a decade of lawsuits, investigations and federal legislation has not created a card market that is free and fair. The U.S. has moved slowly compared with other industrialized countries in trying to make this a competitive market, but at least there has been some movement. Now, it’s time for more reform so we get out of the no-win situation the credit card industry has put us in.
Mallory Duncan is chairman of the Merchants Payments Coalition and general counsel of the National Retail Federation.