Last week, Sen. Chuck Grassley (R-IA) questioned witnesses during a Senate Judiciary Committee hearing on excessive swipe fees for credit & debit cards.
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Prepared Opening Statement by Senator Chuck Grassley of IowaRanking Member, Senate Judiciary CommitteeHearing on Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card SystemsWednesday, May 4, 2022
Committee on the Judiciary, MAY 04, 2022
Interchange or swipe fees is the amount of money that a merchant pays for accepting a debit or credit card. These fees vary depending on many factors, but in general end up being between 1 to 3 percent of purchases. A greater focus has been paid to these fees as more and more consumers use credit or debit cards to make their purchases.
As many of my colleagues know, this is an issue that has passionate voices on both sides.
Many Iowa businesses have complained that it seems these fees are high for accepting credit and debit cards for purchases. These businesses want to give their customers the option to pay using different methods, but that can be difficult if fees are eating into already tight margins, especially for small business owners. They may have to pass along these costs to the consumer.
On the other hand, there are a number of benefits to card usage for both consumers and businesses, including convenience, security and increased purchasing power. Consumers may spend more money with a card than if they use cash. Consumers may also benefit through rewards or cash back on their cards.
There’s a balancing act here that we need to acknowledge, and that any future action should be carefully considered for possible impacts. I look forward to hearing from all of our witnesses.
As this is a Judiciary Committee hearing, we’re looking at competition and whether interchange fees are set above rates that would be found in a competitive market. Two witnesses here today represent Visa and MasterCard, the two largest payment networks in the United States with over an 80 percent share in the credit card market. I look forward to hearing whether these rates reflect market forces.
I now want to turn to a concern that is front of mind for Iowans and Americans across the country: inflation. It seems like every industry, including both merchants and banks, have been blamed by the President and other Democrats for inflation.
That blame game doesn’t work as President Biden and his allies in Congress spent trillions of taxpayer money as fast as they could on a liberal wish list, even when economists were warning about inflation. Earlier this month the Bureau of Labor Statistics reported that the 12-month increase in inflation for March was 8.5 percent. This is the largest annual increase in over 40 years.
This obscures the actual rising costs that Iowans have been hit with. In the Midwest, the price of ground beef is up 24.5 percent, bacon up 26.3 percent, pork chops up 23 percent, chicken up 31.2 percent, and eggs up 22.2 percent.
These are not luxury items. These are family dinner table items. These staggering increases are negatively impacting all Americans. We must get this under control, and that’s not by spending trillions more like the President wants to do.