Credit-Card Networks

Two senators have reopened questions about the manner in which card-related payments are handled, tackling those applicable to credit cards with a bill mandating that merchants must be given a network choice that is not either Visa or Mastercard in order to, the sponsors argue, increase competition and lower credit-card transaction costs.  Although the multi-network requirement would apply only to banks with assets over $100 billion, it would likely have the effect of lowering swipe fees across the sector because exempt banks would be compelled by market forces to find lower-cost networks.  The extent to which these lower-cost networks are also sound and resilient under stress is uncertain as no safety-and-soundness or operational requirements directly apply to card-processing networks.