SCOOP: “Business-to-business solutions are always preferable”: U.S. Senator, Republican officials praise credit card settlement

Here's the latest on the Credit Card Competition Act, featuring Sens. Durbin, Tillis, and more.

The Wall Street Journal reported that Visa and Mastercard are nearing a settlement with merchants in a long-running dispute over credit-card fees. The emerging agreement would lower interchange fees and give merchants more flexibility in dealing with customers. The deal has been praised by many in industry and in conservative circles as an example of the private sector working.

The Journal first reported that the deal would include a small reduction in interchange rates and new options for merchants to differentiate among types of cards. The litigation has focused on whether card networks and issuing banks imposed rules that limited merchants’ ability to manage rising processing costs.

The potential agreement arrives as Congress continues to debate proposals to overhaul the credit-card market. Supporters of the Credit Card Competition Act (CCCA), led by Sen. Dick Durbin (D., Ill.), have argued that the federal government should take over the credit card market by allowing retailers to decide which network to process a payment on. Opponents of the CCCA argue that consumers should decide which credit cards to use, and that private negotiations are a better way to resolve the issue.

Sen. Thom Tillis (R., N.C.) weighed in shortly after the settlement news circulated, saying it demonstrates that industry participants are capable of addressing concerns without additional federal mandates. Tillis “appreciate[s] Visa and Mastercard’s continued efforts to reach a settlement on interchange fees. Today’s announcement would provide small businesses with more flexibility to negotiate which cards they accept, while also enacting limits on interchange rates for the next several years. As the structure of the deal is reviewed, Congress should recognize that business-to-business solutions are always preferable to heavy-handed government mandates.”

Tillis’s remarks drew attention on the Hill as staff offices reassess the legislative landscape.

A Senate source told the Washington Reporter that the development “shows the private sector can work, and hopefully the big retail lobbyists can end their quixotic campaign to have a federal takeover of the credit card industry.”

The settlement still requires court approval. Congressional aides expect the announcement to influence ongoing discussions about whether further legislative action is necessary or whether the settlement shows the private sector is better positioned to settle these issues.