The ccc's best chance is probably as an amendment to another bigger piece of legislation, which is how debit-card regulation passed in 2010. It is sponsored by Mr Durbin, the second-most senior Democrat in the Senate, and it is bipartisan, co-sponsored by Roger Marshall, a Republican from Kansas. They could compete for business by offering lower interchange rates, and merchants would presumably jump at the offer. Crucially, these choices could not be the two biggest - at least one smaller network would have to be offered. If the ccc becomes law it will force banks to offer merchants the choice of at least two different card networks. At present, when a bank issues a credit card every transaction on it is processed by the card network the bank stipulates, meaning the bank is guaranteed the interchange fee the network sets. Instead, the ccc would attempt to spur competition by breaking the links between card networks and banks. It does not propose a cap on interchange, as the debit rule does, since costs for credit cards are more variable than for debit cards, making it harder to find the right level. On July 28th Richard Durbin, the same Democratic senator who regulated debit interchange a decade ago, introduced the Credit Card Competition Act (ccc). After a long wait, new entrants now look like they could shake up America's market. Payments have been transformed in Brazil, China and Indonesia by cheap, convenient app-based options from tech giants like Mercado Pago, Ant Group, Tencent and Grab. The first comes from Washington, where legislators hope to smash the duo's grip on payments. The migration from cash is "a significant and long-running tailwind," says Craig Vosburg of Mastercard. American consumers used credit or debit cards for 45% of their transactions in 2016 by 2021, that had reached 57%. Already dominant, in recent years the firms have been boosted by a covid-induced rise in online shopping. At first glance their position appears insurmountable. Two are financial-information firms, Intercontinental Exchange and the cme Group. Rank every firm (excluding real-estate-investment trusts) in the s&p 500 index by their average net-profit margins last year, five years ago and a decade ago, and only four appear in the top 20 every time. Doing so has made them two of the most profitable companies in the world, with net margins last year of 51% and 46% respectively. That largely benefits two firms: Visa and Mastercard, which facilitate more than three-quarters of the country's credit-card transactions. An anonymous reader quotes a report from The Economist: America is home to the heftiest interchange fees of any major economy - costs are an order of magnitude greater than in Europe and China.
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